What’s the story
Riju Ravindran, co-founder of the edtech behemoth BYJU’S, has been penalized by a US Bankruptcy Court for contempt.
The court ruling came after Ravindran repeatedly refused to disclose the whereabouts of $533 million in term loan proceeds.
The announcement was made public through a release from the company’s group of lenders.
The exact financial penalties will be determined at a future hearing.
Court prohibits further use of concealed loan proceeds
The court, presided over by Judge John T. Dorsey, has also barred any further transfer or use of the concealed $533 million in loan proceeds.
The ruling was made during a show cause hearing on May 20, in the United States Bankruptcy Court for the District of Delaware.
Ravindran is also one of three directors of Think & Learn Pvt Ltd and brother to CEO Byju Raveendran.
Co-founders and hedge fund manager implicated
The court found that Byju and Divya Gokulnath, co-founders of BYJU’S, were working in concert with Riju.
In addition to this, the court ordered the arrest of hedge fund manager William Morton for his repeated refusal to appear in court.
This ruling adds to the mounting legal issues faced by BYJU’S, a company once valued at $22 billion but now grappling with multiple lawsuits from key global investors, vendors, and bondholders.
BYJU’S legal battle with bondholders continues
The ruling is the latest development in a year-long legal battle between Think & Learn, BYJU’S parent company, and a group of bondholders holding term loan B bonds.
In 2021, BYJU’S Alpha Inc., a US subsidiary of BYJU’S was established to receive proceeds from the term loan.
The following year, this subsidiary transferred $533 million in loan proceeds to Camshaft Capital Fund LP, a hedge fund founded by William Morton.
