The steering committee of the ad hoc group of term loan lenders (the “SteerCo”) of Byju’s $1.2 billion term loan today announced that Judge John T. Dorsey of the United States Bankruptcy Court for the District of Delaware (the “Court”) issued an order granting a preliminary injunction (the “Order”) in favour of Byju’s Alpha, Inc. against Riju Ravindran, Inspilearn LLC, and Camshaft Capital Fund, LP and its affiliates (the “Defendants”). The SteerCo stated the Court also found Byju Raveendran and Divya Gokulnath, founders of edtech company Byju’s, are working in concert with the Defendants and ordered them to comply with its ruling.

Pursuant to the Order, the SteerCo stated Byju Raveendran, Divya Gokulnath, and the Defendants are prohibited from further transferring or using any of the $533 million in loan proceeds previously held by Camshaft Capital Fund, LP and subsequently transferred to an unnamed, unknown offshore trust.

In making its ruling, the ad hoc group stated that the Court confirmed that the transfer of funds from Byju’s Alpha, and their continued concealment, likely constitutes a fraudulent conveyance.

The SteerCo highlighted the Judge’s commentary:

“The fact that the parent company is attempting to hide where the assets are is huge. It shows that they are engaged in what appears to be potential fraud.”

“Mr. Ravindran… either was being untruthful or he’s the most incompetent officer or director of a company in Delaware history.”

“I’m still very upset about the fact that [the Defendants] are obfuscating where this money is. And they are trying every trick in the book to be able to say, ‘we don’t know, this guy doesn’t know, that guy doesn’t know, we don’t know where it is, we can’t tell you,’ and I’m tired of it.”

Additionally, the SteerCo stated the Court ordered the arrest of William Morton, the founder of Camshaft Capital Fund, LP, following his repeated refusal to appear in court and provide any of the requested information regarding the transfers of the $533 million in loan proceeds and the current status and location of the funds. Morton was also ordered to pay a fine of $10,000 per day until he complies with the Court’s Order.

In connection with the Order, the SteerCo issued the following statement:

“The significance of the Court’s ruling for all aggrieved parties owed money by Byju’s cannot be overstated. This ruling confirms that Byju Raveendran himself is acting in concert with, among others, his brother, Riju, his wife, Divya, and fugitive William Morton, and that these individuals are continuing to intentionally defraud BYJU’s lenders. The Court-ordered freezing of assets is an important step towards recovering the missing $533 million, and we will take all necessary legal actions to recover what we are rightfully owed,” alleged the SteerCo. “There should be no doubt that Byju is not the victim he purports to be, but rather the architect of a scheme that has vaporized tens of billions of dollars in value in what was once a great Indian company. We call on Byju to accept the will of Think & Learn’s shareholders and immediately step down as CEO and director to prevent further harm to the company’s employees, students and their families, and India’s credibility among the global investment community,” said the SteerCo.

However, Byju’s on Friday claimed that the judge rejected the request made by the alleged debtor in possession and TLB Lenders for a mandatory injunction seeking deposit of the money with the court. Instead, Byju’s stated the court granted a preliminary injunction preventing transfers of the funds. This means that the funds remain safe where they are, and cannot be utilized or further transferred. Byju’s stated this represents a major setback to the lenders’ efforts to gain control over the disputed funds, as the court found they had not met the standards for the grant of a mandatory injunction.

In connection with the Order passed at yesterday’s hearing, Byju’s stated this Order merely maintains the status quo, as the firm has always maintained that the said funds are safely parked in one of its subsidiaries.

“As per the order, it will rightfully remain there. In fact, the court denied the primary relief requested – that a mandatory injunction be granted depositing the monies into court. We had also consistently maintained that the lenders last year were aware of the situation of the $500 million in Byju’s Alpha. We are satisfied that this matter has been laid to rest,” said Byju’s. “It is now clear that this so-called ad hoc group is working in cohort with certain large investors of Byju’s to exploit the situation and make windfall gains. This cartel has selectively released some remarks made by the presiding judge to build fake narratives in the media. There should be no doubt that we will continue to fight this falsehood for the sake of all our stakeholders, including the millions of students whom we proudly serve. This case represents a concerning attempt by a group of opportunistic foreign lenders to exploit an Indian start-up by levelling baseless allegations with the sole intent of extracting punitive monetary concessions,” said Byju’s.

First Published: Mar 16 2024 | 12:04 AM IST

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