Byju’s Founders Sued in US Over $533 Million Transfer

The US-based financial arm of edtech giant Byju's, called Byju's Alpha, has filed a lawsuit against the company's co-founders in an American court.

Byju's Alpha claims that Raveendran, Divya Gokulnath, and one former top executive, Anita Kishore, directed or allowed the transfer of over $533 million, the "Alpha Funds", to be transferred to other, seemingly unrelated group entities. According to the complaint, the Alpha Funds were sent off without any recourse back to Byju's. The complaint claims that over half a billion dollars went missing with the co-founders' and Kishore's knowledge or direction.

Co-Founder Denies Accusations, Points to Conspiracy

In response to the lawsuit, Raveendran strongly denied the claims, calling them baseless and part of a broader strategy by Glas Trust, the lender's trustee, to take control of the edtech firm. He said the allegations are just another instance in what he calls a larger, ongoing campaign of misinformation by Glas, whom he accuses of acting unlawfully. 

"This lawsuit is a part of Glas' conspiracy to wrestle control of Byju's through all possible nefarious means. It is nothing but another cog in the wheel of lies that Glas, the illegal representative of disqualified lenders in the US, has been rotating for a long time now," Raveendran said.

According to Raveendran, a court affidavit had already accounted for the full use of the loan funds, down to the last dollar, but this was allegedly ignored in favor of pushing litigation.

Criminal Allegations Against Lenders Surface

Raveendran, countering the accusations against him, raised serious allegations that could violate the U.S. Foreign Corrupt Practices Act (FCPA). He claimed that individuals associated with the lenders had engaged in bribing an Indian judicial official. Raveendran specifically named people from Redwood, HG Vora, and Glas in this accusation. If proven, these claims could lead to some severe international legal headaches for all the individuals and entities involved. Raveendran also noted that Glas is already facing a criminal investigation in India, which could make their role in all this even messier.

Key Transfer Under Scrutiny

This week, court filings were reviewed that pertain to the alleged diversion of funds that involve transferring a limited partnership interest worth over $540 million in Camshaft Capital Fund. The lawsuit claims that this transfer, done March 31, 2023, was made from the Alpha to a non-guarantor affiliate, Inspilearn, and that this was done without any compensation. The complaint portrays the action as simply the leadership team trying to pull off a "lawless scheme" since they'd just defaulted and were under pressure. Now that the case is in court, it seems there's going to be even more visibility on just how precarious the edtech startup's governance and finances are.