Byju founder allegedly used hidden funds to regain control of the company: report

Last updated:Nov 21, 2024 12:39 IST

In India, Byju’s is facing insolvency proceedings, where a court-appointed professional raises money to repay creditors.

Byju Raveendran (archive photo)

The founder of EdTech giant ByjusAccording to the court, Byju Raveendran allegedly tried to use hidden loan proceeds to secretly buy Epic! to buy back, a US-based education software company acquired by a US trustee.

Byju Raveendran’s alleged attempt to regain control

Raveendran is trying to regain control of his troubled education technology empire amid ongoing legal battles, according to Nebraska businessman William R. Hailer. Bloomberg reported.

Byju’s struggle in the US and India

Byju’s is under judicial supervision in both India, where its parent company is based, and the US, where some of its most valuable units are located.

Allegations of loan manipulation

According to the Bloomberg The report alleges Raveendran recruited Hailer, a former political consultant, to help buy out U.S. creditors owed more than $1.2 billion under a distressed loan. The proposed plan involved swapping the debt, which was worth just 0.24 cents on the dollar, for ownership of Epic! However, this attempt failed, according to documents at the US Bankruptcy Court in Delaware.

Testimony against Raveendran

In his statement before the court, Hailer accused Raveendran of exploiting him. “Over the past few months, I have been used as a pawn in Byju’s manipulation of the law,” Hailer stated. He will testify on behalf of a trustee who plans to set up Epic! to sell to raise money for Byju’s creditors.

Financial transactions under scrutiny

Hailer revealed that Raveendran transferred $11.25 million to Rose Lake Inc., a company controlled by Hailer, as part of a strategy to demonstrate financial stability to lenders. The money came from OCI Ltd., a British-based logistics company that had received hundreds of millions in loan proceeds and is now being pursued by U.S. creditors.

Allegations of embezzlement

Lenders allege Raveendran hid $533 million in loan proceeds intended for repayment. Although Raveendran has denied any wrongdoing and claimed his actions were in response to aggressive tactics by creditors, lenders have filed lawsuits in both U.S. state and federal courts to recover the money.

Broader implications

In India, Byju’s is facing insolvency proceedings, where a court-appointed professional raises money to repay creditors. The ongoing legal battle in both countries underlines the precarious position of the edtech giant as it struggles to stabilize its finances and operations.