US court cites Byju Raveendran's non-compliance, orders $1 bn penalty

A Delaware bankruptcy court has imposed a default judgment of over $1 bn on Byju Raveendran for repeated discovery violations in the Byju's Alpha case

A bankruptcy court in Delaware has entered a default judgment of more than $1.07 billion against Byju Raveendran, founder of the embattled edtech company Byju’s, after finding that he repeatedly failed to comply with court-ordered discovery in proceedings involving the group’s US subsidiary, Byju’s Alpha Inc.

 

A default judgment is a binding court decision in favour of one party when the other party fails to take a required action, most commonly when a defendant does not respond to a court summons or appear in court. It is similar to an ex parte judgment in India.

 

The judgment, delivered by Judge Brendan Linehan Shannon of the US Bankruptcy Court for the District of Delaware, cites what it described as extensive and repeated non-compliance by Raveendran with discovery directives. The court noted that he had missed deadlines, ignored prior sanctions and failed to make mandatory disclosures despite multiple warnings.

 

"The Court has already found that Raveendran’s discovery responses were incomplete, evasive and ‘not even remotely satisfactory or consistent with what the Court would expect a legitimate and good faith document production would be’… the Court has also found that Raveendran’s behaviour has been a strategic pattern of wilful failure to comply with discovery," the judgment said.

 

A discovery directive is the court’s specific order guiding information gathering within a bankruptcy case.

 

What does the $1 bn default judgment include?

 

The default judgment comprises two components: approximately $533 million linked to the transfer of the Alpha Funds in 2022, and about $540.6 million relating to the transfer of the Alpha Funds’ interest in Camshaft Capital Fund, a US hedge fund. Together, the two sums take the total liability to more than $1 billion.

 

The proceedings arose from a complaint filed by Byju’s Alpha and its lender representative, GLAS Trust Company LLC. They alleged that substantial sums were moved out of the US unit and routed through offshore entities in a manner that placed the funds beyond creditor reach. The money, the lenders said, had originally been drawn from a term-loan facility raised by the company.

 

The Delaware court not only imposed the billion-dollar judgment but also directed Raveendran to produce a complete accounting of all transactions linked to the Alpha Funds, including every transfer and the current location of proceeds.

 

Earlier, the court had fined Raveendran $ 10,000 per day for failing to comply with discovery orders, a sanction he allegedly ignored. The latest ruling concluded that his conduct left the court no alternative but to enter default judgment.

 

"Dismissal or default judgment must be sanctions of last resort, and a court should assure itself that no other sanction would serve the ends of justice," the court held.

 

The judgment acknowledged that the relief granted was extraordinary. "But the circumstances of this case are, frankly, unique and unlike anything the undersigned has encountered before, thereby making such relief in this case richly warranted," it said.

 

How has Byju Raveendran responded to the ruling?

 

Byju Raveendran said on November 22 that he will appeal the default judgment. He denied wrongdoing, asserting that the funds were used legitimately and accusing GLAS Trust of misleading the Delaware court and the public.

 

"The Delaware Court judgement also does not address the fact that GLAS Trust has been aware that the monies from the Alpha loans were not used by Byju Raveendran or any Founder of BYJU’s for their personal gain but were used for the benefit of Think & Learn Private Limited (TLPL)," he said in the statement.

 

What actions are the founders planning next?

 

According to the statement, Raveendran and other founders are preparing claims in other jurisdictions, estimated at not less than $ 2.5 billion, including allegations of racketeering and obstruction of justice. Claims may be filed before the end of 2025 if there is no settlement.

 

It also said applications are pending before courts in India seeking disclosure and accountability from GLAS Trust and the resolution professional of TLPL regarding the use of funds.

Timeline:

 

2021-22: Byju’s Alpha Inc., a US subsidiary of Byju’s India, borrows $1.2 billion through a term-loan facility from global investors.

 

Mid-2023: Lenders accuse the company of diverting loan proceeds to entities such as Camshaft Capital LLC. Byju’s denies misappropriation and sues lenders for alleged predatory tactics.

 

June 2024: Byju’s Alpha files for bankruptcy in the Delaware court; GLAS Trust Company LLC acts as agent for the lenders.

 

2024-25: The court repeatedly orders discovery, imposes daily sanctions for non-compliance, and issues warnings to Raveendran.

 

November 2025: Court enters default judgment exceeding $1 billion against Raveendran and orders full accounting of the Alpha Funds.