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(Bloomberg) -- A software company controlled by Indian entrepreneur Byju Raveendran drained cash from US affiliates in violation of US bankruptcy rules, according to a lawsuit filed Tuesday in federal court in Delaware. Most Read from Bloomberg Urban Heat Stress Is Another Disparity in the World’s Most Unequal Nation From Cleveland to Chicago, NFL Teams Dream of Domed Stadiums Singapore Ends 181 Years of Horse Racing to Make Way for Homes Chicago’s $1 Billion Budget Hole Exacerbated by School Turmoil What Do US Vehicle Regulators Have Against Tiny Cars? Money that should be used to repay creditors was instead siphoned off to Whitehat Education Technology, a court-approved trustee for the affiliates said in court papers. The trustee, bankruptcy attorney Claudia Springer, sued to get back nearly $700,000 that was moved from entities under her control. The dispute is a small piece of a much bigger battle between Raveendran’s troubled tech company Byju’s and lenders owed more than $1.2 billion. For more than a year, those lenders have tried to track down $533 million that Byju allegedly hid from them.
A representative for Byju’s did not respond to an email requesting comment. A Byju’s affiliate that once held the missing $533 million was taken over by lenders and put into Chapter 11 bankruptcy, while three other units were forced into insolvency proceedings and placed under the Springer’s control. All of those US-based entities are in bankruptcy court in Wilmington, Delaware, while Byju’s itself faces bankruptcy proceedings in India. When a company comes under court protection in the US, especially in the early days of a case, cash cannot typically be moved or used to pay bills without a bankruptcy judge’s approval. Lenders have accused Byju’s officials of moving the $533 million in violation of bankruptcy rules.
Byju’s faces a fraudulent-transfer lawsuit in a US bankruptcy court related to those funds. That case involves Byju’s Alpha, a shell company created by Byju’s to tap US capital markets. After Byju’s defaulted, lenders seized control of the shell company, put it under court protection and sued to get the $533 million they claim should go to them. The US bankruptcy case is BYJU’s Alpha Inc., 24-10140, US Bankruptcy Court District of Delaware (Wilmington). --With assistance from Jonathan Randles.
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Byju’s Affiliate Drained Cash from US Units, Lawsuit Says
October 08, 2024 10:44 PM BST | By EODHD
