$533 million missing Alpha funds ‘roundtripped’ to CEO Byju Raveendran, alleges US court filing; Byju's denies it

Most of the $533 million missing from Byju's Alpha was “round-tripped” to founder Byju Raveendran and his affiliates, according to a recent filing in a Delaware bankruptcy court, contradicting earlier sworn claims that the funds were used for “legitimate corporate needs”.

Byju's Alpha is a US-based special purpose vehicle set up by Raveendran and his affiliates.

The bankrupt Indian education technology firm reportedly used OCI Limited, a UK-based logistics company, to help hide the cash from US lenders, the court filing claimed.

“The truth of what happened to the missing $533 million Alpha Funds has been an alarming mystery for a long time. But as part of its Settlement with the Debtor, OCI, a mediate transferee of the vast majority of that money, has agreed to come forward. The truth about what happened to the vast majority of the Alpha Funds is that they were, in effect, roundtripped right back to Byju Raveendran and his affiliates,” said the court filing seen by Livemint.

The allegation was filed on 15 November by the plaintiff and debtor Byju's Alpha, along with the intervener-plaintiff GLAS Trust Company, in a court submission.

However, Byju's released a media statement on 18 November, denying all these allegations.

Where is the missing money?

OCI Limited founder Oliver Chapman, in a sworn declaration, revealed the details of what happened to the Alpha funds as part of a proposed settlement in a lawsuit that alleges that the firm helped Byju's conceal the cash.

Raveendran had repeatedly claimed that the money would be used to procure services and equipment for Byju's, whose parent company is Think and Learn Pvt Ltd. However, the majority of the cash was moved to a Singapore-based corporate entity called Byju's Global, which Raveendran owned individually, Chapman said in the declaration.

“This demonstrates that Raveendran’s plot was to siphon hundreds of millions of dollars of corporate assets for personal use,” the declaration stated.

OCI has further asserted that former advisor, Rupin Banker, in coordination with Raveendran, misused the logistics company to facilitate a fraud aimed at blocking lenders from recovering the money.

Now that Chapman came forward to provide lenders with details about what happened to the cash, the lender-backed lawsuit and a related case would hold Banker and Raveendran responsible for the missing money.

Byju’s faces multiple litigations

In October last year, Raveendran confirmed that the $533 million could not be made available to the edtech's term loan B lenders, saying it had been committed to future expenses — a shift from his previous claim that the money was kept safe overseas, Mint reported earlier.

Byju’s is facing multiple litigations from lenders and investors. Lenders have sought repayment of the $1.2 billion loan he took in November 2021. Investors have sought to preserve their rights in the company's parent entity, Think & Learn, while some, including Qatar Investment Authority, have sought a court ruling to obtain details of Raveendran's personal assets.

Bengaluru-based Byju's has been under scrutiny from US lenders for over two years, as they pressed for repayment of the $1.2 billion loan raised in November 2021. As a result, the lenders seized control of the US shell company that borrowed the money and distributed the funds to Byju’s operating entities in India and elsewhere.

Last year, the lenders took over the shell company, Byju’s Alpha, and placed it under Chapter 11 bankruptcy. Three other units were also forced into insolvency and placed under the control of Claudia Springer, a bankruptcy attorney. At the same time, Byju’s was also forced into bankruptcy.

Byju's denies allegations

The company has disputed all allegations made against CEO Byju Raveendran and his associates in the Delaware Court submission.

“This submission to the Delaware Court does not address the fact that GLAS Trust has been aware that the monies from the Alpha loans were not used by Byju Raveendran or any Founder of BYJU's for their personal gain but were used for the benefit of Think & Learn Private Limited (TLPL),” the company said in the media statement.

The company further asserted that it holds all rights to take action against OCI and its director for the damage caused to Byju's due to the allegations, it said.

“GLAS Trust controls Think & Learn Private Limited and the Resolution Professional of TLPL should be confronted and held responsible to explain the use of these funds. Applications are pending before the Courts in India to require such disclosure and accountability by GLAS Trust and the Resolution Professional of TLPL,” the company said.

Byju's further said that claims are also being prepared against Glas Trust and others in additional jurisdictions. “Such claims to be issued by all or some of BYJU's Founders are expected to demand monetary damages of not less than $2.5 billion and absent a settlement are expected to be filed with the relevant Court prior to the end of 2025.” stated J Michael McNutt, Senior Litigation Advisor, Lazareff Le Bars Eurl.