BYJU’s Byju Raveendran's financial woes continue as US court holds him in contempt
A US court found Byju Raveendran, co-founder of the ed-tech company BYJU’s, in contempt on Monday for failing to produce documents and appearing in court proceedings related to a case of financial fraud. Byju had not appeared for hearings and missed deadlines for submitting relevant documents citing a travel ban in the UAE as well as similar cases in Dubai and India.
The opposing counsel told the court on June 28 that, “Only on June 26, when faced with the impending show-cause hearing and imminent threat of sanctions, did Byju, who has been aware of the Debtor’s specific questions since April 11 and more generally aware of the information sought in these proceedings for more than two years, provide some semblance of written responses to the interrogatories.”
“Worse still, as of the filing of this reply brief, Byju still has not produced a single document,” they added, referring to two court orders Byju ignored.
The court has also imposed daily civil sanctions of USD 10,000 on him, starting July 1.
Raveendran had argued that the Delaware Bankruptcy Court lacked “personal jurisdiction over him,” but the court ruled against him based on new evidence presented by lenders.
The Economic Times reported the judge as saying, “I have seen a lot, but I have not seen strategic and patterned failure to provide meaningful, substantive responses to very basic and cogent questions that have gone on for more than a year,”.
Lawsuit filed by lenders in April
The case was filed by lenders in April and is the first in the US against Byju in the alleged loan fraud. It alleged that Byju, along with his wife Divya Gokulnath and former company associate Anita Kishore, misappropriated $533 million from the funds lent to Byju’s Alpha, a financial vehicle established by the company in 2021 in the U.S. for the purpose of receiving a $1.2 billion loan.
Glas Trust, a consortium composed of 37 lenders, reportedly funded the Term Loan B (TLB) intended to aid the startup’s global expansion. Alpha started defaulting the loan in March 2022 and was put under trusteeship in March 2023.
The News Minute reported that by the time Timothy R Pohl took over from Riju Raveedran as Alpha's trustee in 2023, the accounts contained less than USD 550,000 in the aggregate.
Civil sanctions have already been applied to Riju Raveendran, brother of Byju in the primary case, with a fine of USD 10,000 per day imposed on him beginning from July 1. The court found that Raveendran had reportedly violated his fiduciary responsibilities as a director of the US entity, Alpha.
Once valued at $22 billion, the startup company’s value has plummeted to $1 billion after multiple cases of insolvency and fraud in India and abroad.