Byju Raveendran, the founder of Byju's, has been accused of secretly trying to use loan proceeds that were hidden by him from US lenders. As per a US court ruling, the founder is said to have used the loan funds to repurchase a software company that had been seized by an American trustee.
This is as per a Bloomberg report. Further, a court declaration filed by Nebraska businessman William R. Hailer highlighted that the ed-tech firm’s founder has been trying to take back control of his struggling education technology company.
“Over the last several months I have been used as a pawn in Byju’s manipulation of the law,” mentioned Hailer in his testimony. On behalf of a trustee, Hailer will testify in federal court today.
The company is currently being overseen by the courts in both India (where the parent company is headquartered) and the US (where some of its important divisions or assets are situated).
Hailer, a political consultant, was reportedly recruited by Raveendran with the intent to buy out US creditors, as per a US court filing. Raveendran owes more than $1.2 billion to the creditors. The ed-tech founder’s plan was to exchange the debt he owned with the ownership of Epic! (an American education-software company). However, the plan didn’t become a success.
This comes at a time when the edtech founder has consistently denied any wrongdoing. The fight between lenders and Raveendran has been going on for more than a year on several courts. To add to it, the ed-tech firm is also facing insolvency in its home country.
Meanwhile, US lenders have repeatedly highlighted that Raveendran needs to pay the full amount to them. This comes at a time when the ed-tech founder highlighted that he might not be able to pay back the entire amount as the verified debt of the company is merely Rs 20 crore.
Byju’s Obligated to Repay Full amount: Lenders
The steering committee of the ad hoc group of the term lenders reportedly said in a statement in September this year, “Neither Byju Raveendran (founder) nor the Insolvency Resolution Professional (IRP) has the authority to disqualify any term loan lender—and even if they did, Byju’s would still be obligated to repay the full amount of the loan plus interest. Any argument otherwise is illegitimate, and Byju knows it.”
Interestingly, Hailer highlighted in his court filing that the ed-tech firm’s founder sent $11.25 million to a company called Rose Lake Inc., run by Hailer. The intent behind this was to show the US lenders that he had enough funds. The source of the money was a UK company called OCI Ltd., which received large loans. Something that the US lenders are trying to recover. Hailer did try to find proof that OCI still held money for Byju’s. However, Ravendran has highlighted that the fund has been spent.
Amid the ongoing fiasco, the ed-tech firm once valued at $22 billion in 2022 is now valued at zero. In an interaction with reporters on October 18, Raveendran reportedly said, “The company is worth zero. What valuation are you talking about? It is zero."
He further added, “We overestimated potential growth and entered a lot of markets together. It was a little too much, too soon.”
