Byju's subsidiary sues Byju Raveendran, other executives for alleged theft of $533 million

Byju's Alpha Inc, a US-based subsidiary of Think & Learn Pvt Ltd, which operated the troubled edtech startup Byju's, has sued its parent company, its founder Byju Raveendran, his co-founder, his wife Divya Gokulnath and consigliere Anita Kishore for an alleged theft of $533 million.

The lawsuit states that “each of them co-orchestrated and executed a lawless scheme to conceal and steal $533 million of loan proceeds,” according to the company's official statement, which was released on April 9.

Byju's Alpha Inc. is a Delaware-based special-purpose financing vehicle established in 2021 to receive a $1.5 billion term loan.

This new lawsuit follows a Delaware court's recent judgement against Byju Raveendran's brother, Riju Raveendran, and “Byju’s’ ultimate corporate parent in India.”

"This action is being brought to now hold Byju Raveendran, the former CEO of BYJU’s Alpha, and two more of his co-conspirators – namely his co-founder and close business associate – accountable for their roles in masterminding the theft of more than half a billion dollars,” the lenders of the loan stated.

What happened?

After receiving the loan, Byju's Alpha alleges that in mid-2022, $533 million was transferred to Camshaft Capital Fund, LP, a “sham hedge fund” founded by William Morton “with no investment track record and a listed headquarters with the same address as a pancake restaurant.”

This was before the brothers were removed as directors and officers of the company on March 3, 2023.

Afterwards, BYJU’s Alpha’s limited partnership interest in Camshaft Capital Fund was transferred by Riju and Byju to Inspilearn LLC, and then again transferred to, and then redeemed by an offshore trust of Inspilearn in February 2024, according to the statement.

The company then defaulted on the credit agreement in March 2022, mere months after receiving the term loans.

Byju's Alpha then filed for Chapter 11 bankruptcy on February 1, 2024. The Inspilearn allegedly moved the funds to an unidentified non-US T&L subsidiary.

Byju, Riju, Divya, and Anita then “repeatedly misrepresented and contradicted themselves” regarding the use and location of the $533 million Alpha Funds, as per the statement.

Then on March 15, Byju's issued a statement in response to a preliminary injunction ordered by the Delaware Bankruptcy Court whereby the Court froze the Alpha Funds and prevented their further use or movement.

“The said funds are safely parked in one of our subsidiaries and, as per the order, it will rightfully remain there,” Byju's said in the statement.

Despite this, Byju's on October 4, then went and told the Financial Times publication that it “no longer had access to capital and the entirety” of the Alpha Funds “had been spent.” and declared the same with the Delaware court as well.

What Byju's Alpha wants out of the lawsuit

BYJU’s Alpha said it is seeking the following in the lawsuit:

1) An award of damages for Byju’s breach of fiduciary duties

2) An award of damages for Byju’s, Divya’s, and Anita’s aiding and abetting of the breach of others’ fiduciary duties

3) An accounting of the Alpha Funds

4) An award of damages for conversion and civil conspiracy

5) Reimbursement of all attorneys’ fees, costs, and expenses

6) Reimbursement of interest expenses

7) Any other relief that the court may deem just, proper, or equitable.

The lenders further said, “it is clear that Byju, Divya, and Anita deliberately hid the assets of BYJU’s Alpha and repeatedly were deceptive about the location of the money in order to steal funds rightfully owed to the Lenders" and that “there can be no doubt that they acted unlawfully and tried to cover their tracks, breaching fiduciary duties and making numerous misrepresentations, among other misconduct, in the process”

"If it is not abundantly clear to them by now, Byju and his cohorts will soon learn that the laws of the United States are immutable, and they can either choose to live the rest of their days as international fugitives or face the music and return the money they stole,” they said.

Response from the founders of Byju's

The founders of Byju's, in a statement to HT.com, claimed that “the allegations made by GLAS in the recent lawsuit are completely baseless and untrue” and that the “lawsuit is a part of their conspiracy to wrestle control of BYJU’S through all possible nefarious means.”

“Their strategy of intimidating the founders and management of Byju’s for the last two years has revolved around filing a flimsy and frivolous lawsuit in the US and then peddling it endlessly through media/newswire releases to whitewash their criminal and unethical activities in India,” they alleged.

They further added that “a signed and verified affidavit that we submitted in the court of Delaware has the details of how the entire $1.2 billion loan was spent, to the last dollar” and that the affidavit “was conveniently ignored and GLAS has continued to raise the question of the so-called missing $533 million repeatedly to mislead.”

“It is certainly no coincidence that this lawsuit was filed just days after the news of the FIR and public disclosure of the bribery video involving an Indian court official who has already admitted the fraud in his affidavit to IBBI,” they wrote in the statement. “This is a serious FCPA (Foreign Corrupt Practices Act) violation requiring further investigation into the involvement of Vishal Chanani of Redwood, Dan Ornstein of HG Vora and Irena Goldstein of GLAS in the bribery scheme involving Pankaj Srivastava.”

“GLAS, who is representing disqualified lenders Redwood and HG Vora, is already under investigation in a criminal case involving corruption and bribery charges in India,” they said.