Lenders to SPV in Delaware sue Byju Raveendran for 'stealing' $533 mn

Edtech pioneer, wife and close business associate accused of 'masterminding theft of more than half a billion dollars'

Lenders to a special purpose vehicle (SPV) established by Indian edtech firm Byju’s in Delaware, United States, have sued the startup’s founder Byju Raveendran, his wife and co-founder Divya Gokulnath, and “close business associate” Anita Kishore for allegedly misappropriating $533 million in funds.

 

Byju’s Alpha Inc was set up to receive proceeds of a $1.5 billion loan. Its lawsuit alleged that the three “co-orchestrated and executed a lawless scheme” to conceal and steal $533 million of loan proceeds (Alpha Funds). Byju’s Alpha is debtor and plaintiff in the lawsuit. Byju Raveendran told ‘Business Standard’ the allegations are “completely baseless and untrue”.

 

The lawsuit follows a $533 million judgment by the United States Bankruptcy Court for the District of Delaware against Riju Ravindran, younger brother of Byju, and the edtech firm’s ultimate corporate parent in India.

 

“On the heels of the Delaware Bankruptcy Court’s recent judgment against his brother (Riju) and companies, this action is being brought to now hold Byju Raveendran, the former CEO [chief executive officer] 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,” said the lenders of Byju’s Alpha’s term loans in the lawsuit.

 

“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. In light of the court’s recent decision, 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,” said the lenders.

 

Byju’s Alpha is seeking an award of damages for alleged breach of fiduciary duties, as well as an award of damages for the actions of Byju Raveendran, Divya, and Anita in allegedly aiding and abetting the breach of others’ fiduciary duties. It also seeks an accounting of the Alpha Funds and an award of damages for conversion and civil conspiracy. Additionally, Byju's Alpha is requesting reimbursement of all attorneys’ fees, costs, and expenses, reimbursement of interest expenses, and any other relief that the Court may deem just, proper, or equitable.

 

Byju Raveendran’s response

 

“This lawsuit is a part of their conspiracy to wrestle control of Byju’s through all possible nefarious means,” Byju Raveendran told Business Standard, in response to a query.  “It is nothing but yet another cog in the wheel of lies that Glas, the illegal representative of disqualified lenders in the US, has been rotating for a long time now.”

 

“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,” he said.

 

Kirkland & Ellis LLP is serving as legal counsel for Glas Trust Company, LLC, the administrative agent for the lenders. Quinn Emanuel Urquhart & Sullivan, LLP is serving as legal counsel for Byju’s Alpha.