Byju Raveendran, the embattled founder of Indian ed-tech giant Byju’s, has overturned a US bankruptcy court order forcing him to pay more than $1.07 billion. He denies wrongdoing, accuses the lenders of misleading the court and vows to appeal a ruling that marks a dramatic downfall for a one-time poster child of India’s startup boom.
The Delaware bankruptcy judge issued the default judgment after finding that Raveendran had repeatedly ignored court orders and provided “evasive, incomplete” answers about about $533 million allegedly transferred by Byju’s US unit in 2022 that was never recovered. The judge also cited issues with a separate limited partnership stake that was later valued at about $540.6 million. The ruling, dated Nov. 20, stems from legal action by lenders seeking to recover funds tied to a $1.2 billion term loan they advanced to the ed-tech startup in 2021.
Earlier this year, in April, a group of US lenders led by GLAS Trust sued Raveendran and his wife, Byju co-founder Divya Gokulnath, in Delaware bankruptcy court over $533 million in lost loan proceeds. The pair denied wrongdoing at the time and accused lenders of attempting a hostile takeover of the company. They later said they planned to file a $2.5 billion lawsuit against the GLAS Trust and others in India and other jurisdictions, though no such filing has appeared publicly. This was in addition to the complaint Byju filed in New York Supreme Court challenging the acceleration of the 2023 term loan.
The court’s latest order followed a Sept. 29 hearing on the default request, where the judge cited a months-long pattern of noncompliance. The judge noted that Raveendran skipped hearings, missed extended deadlines and ignored an earlier contempt order that imposed $10,000 in daily penalties that remain unpaid.
U.S. Bankruptcy Judge Brendan Shannon said the relief granted in the case was “extraordinary,” adding that “the circumstances of this case are, frankly, unique and unlike anything the undersigned has encountered in the past, making such relief … amply warranted.” The judge gave the parties seven days to respond to the decision.
“We believe the US Court erred in its judgment in this matter and will file the necessary appeals and other challenges related to this decision and related orders,” J. Michael McNutt, senior trial counsel at Lazareff Le Bars, representing Raveendran, said in a prepared statement to TechCrunch. “The court, in our view, ignored relevant facts.”
Raveendran’s legal counsel argued that the court passed the judgment without giving him an opportunity to file a defense and instead relied on an earlier contempt order. The lawyer also argued that the decision failed to recognize that GLAS Trust knew that Alpha’s loan funds were not used for the personal benefit of Raveendran or other founders but rather for Think & Learn, the startup’s parent company, counsel said.
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The lawyer said Byju’s founders are preparing claims against the GLAS Trust and others in several jurisdictions, which are expected to seek at least $2.5 billion in damages and, in the absence of a settlement, would be filed before the end of 2025.
Still, the default decision marks a stunning fall for Raveendran and his eponymous company, once India’s most valuable startup at $22 billion and backed by global investors including Tiger Global, the Chan Zuckerberg Initiative and Prosus. The company is now mired in lawsuits, funding droughts, mass layoffs and a battle for control as lenders and creditors scramble to recoup what they can.
Raveendran previously challenged the Delaware court’s jurisdiction, but the judge rejected that argument in a previous ruling, writing that “Raveendran’s conduct giving rise to the litigation here relates to his activities … in the United States raising funds and as a director, officer or director of a United States corporation.”
Earlier this week, a Delaware bankruptcy filing alleged that most of the $533 million missing from Byju’s US unit, Alpha, it was “with a return to Byju Raveendran and his associates.” In a reply, Raveendran denied the allegation, saying the funds were not used for personal gain.
Meanwhile, in India, Byju’s is undergoing a court-supervised sale after insolvency proceedings were launched last year, with early bidders including Manipal Education and Medical Group (MEMG) and Ronnie Screwvala’s UpGrad.
