BYJU’s Alpha Sues Byju Raveendran in Delaware Court for Orchestrating Theft of $533 Million

Lawsuit Exposes Byju Raveendran’s “Web of Deception” Designed and Executed to Defraud Lenders

Alleges Byju along with Divya Gokulnath and Anita Kishore are Responsible for Fraudulently Transferring Loan Proceeds, Misrepresenting Financial Information, and Preventing Lenders from Exercising Remedies

Follows Recent Delaware Bankruptcy Court Ruling that Affirmed that Multiple Fraudulent Transfers and Conversion (i.e., theft) Occurred

NEW YORK–(BUSINESS WIRE)–BYJU’s Alpha Inc. (“BYJU’s Alpha” or “Alpha”), a Delaware special purpose financing vehicle established by BYJU’S to receive proceeds of a $1.5 billion Term Loan B (the “Term Loans”), today announced that, following the $533 million judgment of the United States Bankruptcy Court for the District of Delaware (the “Court”) against Riju Ravindran and BYJU’s’ ultimate corporate parent in India, it has filed a lawsuit against Byju Raveendran (“Byju”), his co-Founder and wife Divya Gokulnath, and his consigliere Anita Kishore. The lawsuit states that each of them co-orchestrated and executed a lawless scheme to conceal and steal $533 million of loan proceeds (the “Alpha Funds”).

The ad hoc group of term loan lenders (the “Lenders”) of BYJU’s Alpha’s Term Loans stated: “On the heels of the Delaware Bankruptcy Court’s recent judgment against his brother and companies, this action is being brought to now hold Byju Raveendran, the former CEO 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.”

“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. If it is not abundantly clear to them by now, Byju and his cohorts will soon learn that the laws of the United States are immutable, and they can either choose to live the rest of their days as international fugitives or face the music and return the money they stole.”

Timeline of the Theft of the Alpha Funds

Starting in March 2022, mere months after receiving the Term Loans, BYJU’s Alpha, then under the control of the BYJU’s enterprise, defaulted on the credit agreement. In April, BYJU’s allegedly began the first in what was a series of systematic and unlawful fraudulent transfers of the Alpha Funds. BYJU’s Alpha, including Byju and his brother Riju Ravindran personally, conceded defaults had occurred by entering into numerous amendments and forbearances to the credit agreement.

• First, in mid-2022, BYJU’s Alpha, acting at the behest of at least Byju, Divya, and Riju, started transferring $533 million of the Alpha Funds to Camshaft Capital Fund, LP (the “Camshaft Fund”), a sham hedge fund with no investment track record and a listed headquarters with the same address as a pancake restaurant, ostensibly in exchange for receiving a limited partnership interest in the Camshaft Fund.
• Second, on March 6, 2023, despite the Lenders notifying the BYJU’s enterprise of their exercise of remedies three days prior, thus stripping it of all control of BYJU’s Alpha and its assets, Byju and Anita unlawfully sought to move the Camshaft LP interest to a non-guarantor affiliate, Inspilearn LLC, for zero consideration.
• Third, on February 1, 2024, the same day BYJU’s Alpha filed for Chapter 11 bankruptcy, Inspilearn transferred the Camshaft LP Interest to an offshore trust, which then purportedly fully redeemed it.
• Lastly, Inspilearn later moved the resulting funds to an unidentified non-U.S. T&L subsidiary. It remains unknown whether additional transfers have been made.

Byju’s Pervasive and Extreme Web of Deception Exposed

In an effort to hide their tracks, Byju, Divya, and Anita repeatedly misrepresented and contradicted themselves regarding the use and location of the $533 million Alpha Funds.

1. Following discovery by Timothy R. Pohl, a seasoned restructuring professional who replaced Riju as sole director of BYJU’s Alpha, of the transfers of the Alpha Funds to Camshaft, on September 13, 2023, BYJU’s released an opaque statement in which it “categorically denie[d] media reports which insinuated that BYJU’s was no longer a beneficiary owner of the funds,” instead representing that “an offshore subsidiary remains the beneficiary of the money invested in high security fixed income instruments invested with a multi-hundred billion dollar fund in the U.S.” Camshaft, however, was not a “multi-hundred billion dollar fund,” and no “high security fixed income instruments” were received on account of the Alpha Funds.
2. On January 14, 2024, when asked if the Alpha Funds still exist during a call with the Lenders, Byju said, “[w]e have not touched the money,” and later stated that “more than $500 million” remained “in cash and cash equivalents.”
3. On March 15, 2024, BYJU’s issued a statement in response to a preliminary injunction ordered by the Delaware Bankruptcy Court whereby the Court froze the Alpha Funds – preventing their further use or movement. In the statement, BYJU’s represented that “the said funds are safely parked in one of our subsidiaries and, as per the order, it will rightfully remain there.”
4. On October 4, 2024, after months of telling the Court and the public that the Alpha Funds were safe and within BYJU’s’ control, Byju did a 180-degree pivot, telling the Financial Times that BYJU’s “no longer had access to capital and the entirety” of the Alpha Funds “had been spent.” He also said “the company’s ‘strategy’ of trying to conceal money from creditors ‘has not gone right.’”¹
5. On October 9, 2024, Byju issued a declaration under oath to the Delaware Bankruptcy Court swearing that the Alpha Funds had been spent.

The Lenders added, “It is impossible to square Byju’s representations with his repeated statements to the Court, investors, the public, and the lenders over the prior two years. Either Byju has consistently lied about the whereabouts of the Alpha Funds, or he violated a Court Order. It cannot be both.”

In its lawsuit, BYJU’s Alpha is seeking 1) an award of damages for Byju’s breach of fiduciary duties, 2) an award of damages for Byju’s, Divya’s, and Anita’s aiding and abetting of the breach of others’ fiduciary duties; 3) an accounting of the Alpha Funds; 4) an award of damages for conversion and civil conspiracy; 5) reimbursement of all attorneys’ fees, costs, and expenses; 6) reimbursement of interest expenses; and 7) any other relief that the Court may deem just, proper, or equitable.

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.

¹ Kay, Chris and Cornish, Chloe, “‘Screaming into a hurricane’: the fall of India’s most valuable start-up Byju’s; Edtech company’s legal battles from Delaware to Bengaluru have exposed corporate governance issues.” Financial Times, 4 October 2024, https://www.ft.com/content/8788b2d7-98c1-469b-acbc-fd5fadd97939

Contacts

Media Contacts:
Nathaniel Garnick/Sam Fisher

Gasthalter & Co.

+1 (212) 257-4170

[email protected]