Athira Sethu
Kochi, 9 October 2024
Indian tech company led by Byju Raveendran, Byju’s, is in deep legal trouble in the U.S. A lawsuit was filed in a Delaware federal court, saying the company illegally transferred funds from its U.S. affiliate. According to the complaint, money due to creditors was instead sent to another company called Whitehat Education Technology.
A bankruptcy attorney and court-appointed trustee, Claudia Springer, is seeking the return of approximately $700,000 allegedly transferred from accounts she oversees. The case is part of a much larger fight between Byju’s and lenders, who claim that the company owes them over $1.2 billion.
It’s over a year since lenders began searching for $533 million, which they claimed Byju’s was hiding from them. The contention stems from a US affiliate of the Indian company Byju’s, which once carried the missing $533 million. Creditors took control of the affiliate and filed for Chapter 11 bankruptcy against the affiliate. Three other units of Byju’s had also filed for Chapter 11 bankruptcy and are currently being run by Springer. All these U.S.-based affiliates are in the bankruptcy courts in Wilmington, Delaware while byju’s is also facing bankruptcy proceedings in India.
In U.S. bankruptcy cases, moving or using funds typically requires court approval at least initially. Still, Byju’s is being accused of moving the $533 million in violation of those rules. The lawsuit claims that money was transferred from the affiliate’s Stripe account into the Wells Fargo account associated with Whitehat from September 26 to October 7. According to the lawsuit, individuals from India, whose email addresses carried the byjus.com domain, tried to log into accounts from the U.S. affiliate.
Springer is seeking an interim order from the court to restrain Wells Fargo not to allow any further transfers from the account of Whitehat. Neither Stripe nor Wells Fargo has made a response so far to the issue.
There is another case involving the $533 million in a shell company known as Byju’s Alpha, for which they are being sued. It was set up solely to access U.S. capital markets and after Byju defaulted, the lenders took control. Now, they are suing to regain the amount they claim to be theirs.
