In a twist to the intricate bankruptcy proceedings involving a subsidiary of BYJU’s, a federal judge in the US has taken significant steps towards retrieving $533 Mn allegedly concealed by the Indian edtech giant. The case, marked by accusations and legal maneuvers, unfolds against the backdrop of a heated dispute between lenders and BYJU’s.
Background and Legal Proceedings
The saga began with BYJU’S investing $533 Mn of loan proceeds with Camshaft Fund, a Florida hedge fund managed by William C. Morton, last year. Subsequently, the funds were routed to a UK lender and then transferred to an unnamed, non-US entity affiliated with BYJU’S, as per court records reported by Bloomberg.
Court’s Intervention and Warning
US Bankruptcy Judge John Dorsey, presiding over the case in Wilmington, Delaware, offered to drop the arrest warrant for Morton on the condition that he assists in locating the missing funds. Judge Dorsey directed Morton to return to the US and meet with lawyers representing BYJU’s lenders within 10 days. Failure to comply would result in the reinstatement of the arrest order, with Dorsey accusing Morton of evading questioning by fleeing the US.
Dispute over Missing Funds
The $533 Mn in question is pivotal to the dispute between lenders, owed $1.2 Bn, and BYJU’s. It is linked to BYJU’S Alpha Inc., a bankrupt shell company affiliated with Think & Learn. Lenders are leveraging the bankruptcy case of BYJU’S Alpha Inc. to recover the missing cash.
Contempt of Court and Credibility Concerns
In a related development, Riju Ravindran, brother of BYJU’S founder and CEO Byju Raveendran, was found in contempt of court for his refusal to disclose the whereabouts of the missing funds. Judge Dorsey’s ruling highlighted the lack of credibility in Ravindran’s testimony, suggesting his knowledge or involvement in concealing the funds.
BYJU’s Financial Landscape Amid Legal Challenges
Amidst these legal battles, BYJU’S continues to grapple with financial challenges. The company’s net loss surged by 81% YoY to INR 8,245.2 Cr in FY22, even as operating revenues witnessed significant growth largely attributed to its coaching arm, Aakash.
