US court finds Byju Raveendran, Think & Learn, company directors guilty of fraud

The lenders of Byju’s $1.2 billion term loan said on Friday that the US Bankruptcy Court for the District of Delaware has issued an order that the edtech firm’s suspended director Riju Ravindran, founder Byju Raveendran, hedge fund Camshaft Capital Fund, and parent company Think & Learn are responsible for defrauding Byju’s US entity Byju’s Alpha Inc and its lenders.

According to the lenders’ statement, the court confirmed that several fund transfers from Byju’s Alpha were fraudulent and constituted theft. It also ruled that Riju Ravindran breached his fiduciary duties as a director of Byju’s Alpha.

“We are gratified that the Court unequivocally recognised that Riju Ravindran, Camshaft, and Byju’s together conducted a deliberate fraud on a global scale arising from the theft of $533 million. This is a significant step forward in the Lenders’ efforts to recover the stolen funds that are rightfully owed to them,” the the steering committee of the ad hoc group of term loan lenders to Byju’s Alpha Inc said in a statement.

ET has reached out to Raveendran for a comment on the order.

The judge said that, based on the evidence showing that Think & Learn established a US subsidiary to commit fraud, it is appropriate to claim jurisdiction over the company in this case.

According to the judge, the edtech firm and founders hid the whereabouts of the Alpha Funds on multiple occasions, the statement said. They also failed to provide financial statements of where the funds were transferred and also did not provide basic information requests made by the lenders, it added.

Meanwhile, in India, the US lenders, represented by Glas Trust, are pursuing a legal case against the edtech company in the National Company Law Tribunal (NCLT). On January 29, the NCLT inducted Glas Trust and Aditya Birla Finance onto the committee of creditors of Think & Learn.Riju and the missing cash

Byju’s Alpha filed for US bankruptcy in February after the startup defaulted on its debt. While seeking repayment, the lenders discovered that Byju’s had sent $533 million to William Cameron Morton’s “unknown and unproven hedge fund” Camshaft Capital.

In a lawsuit against Morton and Camshaft, Byju’s lenders said the startup had never explained why it sent so much money to Morton, who is in his mid-twenties and had “no apparent qualification to manage a hedge fund.” Camshaft had no other significant business. Another judge had said Ravindran must pay $10,000 a day until he helps locate $533 million.