In a dramatic turn of events, Byju’s Alpha Inc. has initiated legal action against prominent figures within the company, namely co-founder Byju Raveendran, his spouse Divya Gokulnath, and senior executive Anita Kishore. The lawsuit, filed in a Delaware bankruptcy court, accuses these individuals of mishandling a staggering $533 million from a term loan facility, alleging that they devised a complex plan to misappropriate funds and obscure their actions from creditors.
Background on Byju’s Alpha Inc.
Set up in 2021, Byju’s Alpha Inc. was a special-purpose vehicle intended to manage proceeds from a $1.2 billion term loan B (TLB) facility. However, by 2022, the company reportedly defaulted on this loan. According to the legal complaint, a significant portion of the funds—specifically $533 million—was transferred from Byju’s Alpha to Camshaft Capital Fund LP in exchange for a partnership interest. This hedge fund, based in Delaware, has previously raised red flags in court for its questionable legitimacy, with its purported headquarters linked to a pancake restaurant.
Defendants’ Response
In retaliation to the lawsuit, Byju’s founders firmly deny the allegations, labeling them as “entirely baseless and unfounded.” They argue that this legal action is part of a broader conspiracy aimed at seizing control of the company. They refer to a “signed and verified affidavit” submitted to the court, which they claim accurately details the allocation of the entire $1.2 billion loan.
Allegations of Fund Transfers
Moreover, the lawsuit reveals that after lenders took control of Byju’s Alpha through their agent Glas Trust on March 3, 2023, the defendants allegedly transferred the Camshaft interest—valued at approximately $540.6 million—to Inspilearn LLC. This affiliate of Byju’s was not a guarantor of the loan, and the transfer occurred on March 31, 2023, without any compensation.
- Key Dates:
- March 3, 2023: Lenders gain control of Byju’s Alpha.
- March 31, 2023: Transfer of Camshaft interest to Inspilearn LLC.
- February 1, 2024: Byju’s Alpha files for Chapter 11 bankruptcy.
The lawsuit further contends that on the same day Byju’s Alpha filed for Chapter 11 bankruptcy, the asset was shifted from Inspilearn to an offshore trust, which then redeemed it. This maneuver has left the current status and location of the funds shrouded in mystery.
Pursuit of Justice
The legal complaint builds on previous court findings that suggested fraudulent activity involving Raveendran, Camshaft Capital, and Think & Learn, the Indian parent company of Byju’s. The lawsuit seeks not only damages but also a comprehensive accounting of the allegedly misappropriated funds, citing multiple charges, including breach of fiduciary duty and civil conspiracy.
As this case unfolds, it could have significant implications for the future of Byju’s and its stakeholders. The outcomes may reshape perceptions of corporate governance in the rapidly evolving edtech landscape.
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