US judge orders Byju's to freeze $533 million, victory for lenders
text_fields
Delaware: A US judge has ruled that Indian tech firm Think & Learn Pvt, parent company of Byju's, must freeze $533 million to safeguard the funds for lenders who argue that the money should only be used to repay them.
The decision by US Bankruptcy Judge John Dorsey was seen as a mixed victory for the lenders, who had sought to prevent the cash from being utilized by the firm, operating under the name Byju’s.
The judge's order was specifically directed at Riju Ravindran, a director of the company and the brother of founder Byju Raveendran. Ravindran was tasked with addressing a key aspect of the court dispute by disclosing the whereabouts of the funds.
Judge Dorsey expressed skepticism towards Ravindran's claim of ignorance regarding the funds' location, stating, "I do not believe him when he says he cannot" learn the location from Think & Learn.
Responding to the ruling, a representative for Byju's declined to provide further comment.
Ravindran's attorney, Sheron Korpus, placed blame on the lenders for any financial difficulties faced by Think & Learn, arguing that the company was justified in withholding the funds due to the lenders' aggressive actions regarding the debt default claims. Think & Learn is currently engaged in legal battles with lenders in state courts in Delaware and New York.
Previously, lenders had taken control of a holding company established by Think & Learn to issue $1.2 billion in debt. This entity, Byju’s Alpha, is currently undergoing bankruptcy proceedings overseen by Judge Dorsey. Ravindran is contesting a decision by Delaware’s Chancery Court approving the seizure of Byju’s Alpha.
During a bankruptcy hearing, Judge Dorsey ordered the arrest of William C. Morton, founder of a Florida hedge fund, for refusing to disclose the whereabouts of the allegedly hidden funds. Morton faces contempt of court charges and hefty fines until he provides details about the money, which was briefly held by the hedge fund Camshaft Capital Fund.
The missing funds have become the focal point of a dispute between lenders owed over $1.2 billion and Think & Learn. The $533 million was transferred to Morton’s hedge fund before being moved to an unnamed offshore trust, according to Byju’s Alpha lawyer Benjamin Finestone.
Byju’s is grappling with financial challenges and legal disputes with its shareholders and lenders.
Ravindran testified that three of Think & Learn’s six directors have resigned, leaving him, his brother, and his sister-in-law in charge of the company. Finestone emphasized the urgency of recovering the funds, stating, "It is substantively important that we get these funds because the walls are crumbling."
