Byju’s confusing silence | Business News

A US bankruptcy court holding Riju Ravindran in contempt for not telling the truth should surprise no one. After all, ever since things began to unravel at Byju’s, the unnatural saga has been characterized by one thing: the stoic silence of its promoters.

A US court imposed sanctions on Riju Ravindran, director of Byju’s (Photo: Gettyimages- Hemant Mishra/Mint and Jakub Porzycki/NurPhoto)

B for Byju’s, but now also B for Brazen. Even as investors, customers, regulators and enthusiasts of India’s startup sector wonder what really happened to turn an edtech star once valued at $22 billion into a shit show , its promoters continue to lie and obscure things. And it’s not me who says it. That’s the verdict of a Delware bankruptcy judge, who on Tuesday held Riju Ravindran — the younger brother of the company’s eponymous founder, Byju Raveendran — in contempt for not telling the truth. “Either he knows where the money is or he avoids finding out,” criticized Judge John T. Dorsey.

The money in question represents a staggering amount: $533 million, or Rs 4,424 crore at the current exchange rate. And here’s what happened: In November 2021, Byju’s U.S. arm, Alpha Inc., raised $1.2 billion in debt from a consortium of lenders led by GLAS Trust Co. But the year last, she defaulted on the loan, giving lenders the right to oust Riju Ravindran. as sole administrator of Alpha. During this period, Alpha had transferred more than $500 million through a hedge fund called Cam Shaft Capital Fund, leaving Alpha with only $500,000 on its books.

A dog ate my homework

So when the lenders took Alpha and Cam Shaft to court and the court ordered Ravindran to disclose the money trail, the best defense he could come up with was basically a legal equivalent of “the dog has ate my homework.” The debtors’ lawyer revealed that Ravindran said in his deposition that he tried to find out from his brother Byju Raveendran and sister-in-law Divya Gokulnath where the money was. As he told the court, he had sent by email (emphasis mine) his brother and sister-in-law asked them where the money was and they too denied any knowledge of the money.

According to the debtors’ lawyer, Ravindran told the court that Byju said there was only one Alpha employee who knew where the money was, and he refused to reveal who that person was. when Ravindran asked him. Ravi Subramanian Shankar of Kirkland & Ellis, the consortium’s administrative and collateral agent, said Ravindran’s testimony reveals “either incompetence – a little brother who doesn’t deserve to be on a board other than ‘having the same last name – or something more nefarious; two brothers who do whatever they must to save a crumbling empire.

The only reason why Ravindran is not yet in prison in the United States is the fact that he is domiciled in Dubai and the UAE does not have an extradition treaty with the United States. Therefore, as the judge said, an arrest warrant would serve no purpose. Instead, the judge intends to impose a financial penalty on the accused after obtaining a true picture of his financial situation. The judge previously imposed a $10,000 daily fine on Cam Shaft for refusing to disclose information regarding the money, and that fine now stands at $1 million.

Why the silence?

Even by the most brazen standards of corporate governance, Byju’s conduct was egregious. At this point, the only way to describe their transaction with GLAS would be to say that they stole money from the lenders. They first borrowed, then fraudulently transferred the money, couldn’t pay the interest, then pretended not to know where the money was when lenders wanted to know where the $533 million had gone.

So, the question to ask is: why is Byju Raveendran not revealing the truth? Why would he let his younger brother commit contempt of court in the United States rather than say where the money went? Is he afraid of something or just cheeky?

Unfortunately, with a wall of silence erected around Byju, it’s difficult to get answers to these questions. The worry for lenders will be that the walls will one day collapse, burying the promoters and the truth with them.