Byju’s founder allegedly used hidden funds to regain control of the company: report

Last update:November 21, 2024, 12:39 CEST

In India, Byju’s is facing bankruptcy proceedings and a court-appointed specialist is working to raise funds to repay creditors.

Byju Raveendran (file photo)

Founder of an edtech giant ByjuCourt documents show that Byju Raveendran allegedly tried to use hidden loan proceeds to secretly buy out Epic!, a US educational software company that had been taken over by a US trustee.

Byju Raveendran’s alleged attempt to regain control

According to Nebraska businessman William R. Hailer, Raveendran is trying to regain control of his struggling education technology empire amid ongoing legal battles. Bloomberg reported.

Byju’s fights in the US and India

Byju’s is under judicial supervision both in India, where its parent company is headquartered, and in the U.S., where some of its most valuable units are located.

Allegations of loan manipulation

According to Bloomberg The report said Raveendran allegedly recruited Hailer, a former political consultant, to help bail out U.S. creditors who owed more than $1.2 billion in a distressed loan. The proposed plan was to swap the debt, which was trading at just 0.24 cents on the dollar, for Epic! But those efforts were unsuccessful, according to filings in U.S. Bankruptcy Court in Delaware.

Testimony against Raveendran

In his court declaration, Hailer accused Raveendran of abusing him. “Over the past few months, I have been used as a pawn in Byju’s manipulation of the law,” Hailer stated. He is scheduled to testify on behalf of a trustee planning the sale of Epic! to raise funds for Byju’s creditors.

Financial transactions under control

Hailer revealed that Raveendran transferred $11.25 million to Rose Lake Inc. managed by Hailer as part of a strategy to demonstrate financial stability to lenders. The funds came from OCI Ltd., a British logistics company that received hundreds of millions in loan proceeds now being demanded by U.S. creditors.

Accusations of embezzlement

Lenders allege Raveendran concealed $533 million in loan proceeds earmarked for repayment. Although Raveendran denied any wrongdoing, saying his actions were in response to aggressive creditor tactics, lenders filed lawsuits in both state and U.S. federal courts to recover the funds.

Wider implications

In India, Byju’s is facing bankruptcy proceedings and a court-appointed specialist is working to raise funds to repay creditors. Ongoing legal disputes in both countries highlight the edtech giant’s precarious situation as it seeks to stabilize its finances and operations.