Byju’s Alpha sues parent company, Byju Raveendran, and other executives for alleged $533 million theft, fraud — Details

Byju’s Alpha Inc., the US-based special purpose finance vehicle of Indian ed-tech unicorn Byju’s, has sued its parent, Byju Raveendran, his wife Divya Gokulnath, brother Riju Ravindran, and consigliere Anita Kishore, for alleged theft of $533 million.

The case filed in US Bankruptcy Court for the District of Delaware, alleges that the accused “orchestrated theft of $533 million” in a “web of deception designed and executed to defraud lenders”, the SPV said in an official release on April 9.

The lawsuit alleges Byju and others “fraudulently transferred loan proceeds, misrepresented financial information, and prevented lenders from exercising remedies”.

Byju’s didn’t immediately respond to Livemint’s queries. In a statement issued on 10 April, it alleged that the latest lawsuit is part of a broader scheme to wrest control of the company through “nefarious means”.

According to Alpha, the SPV was established by Byju’s to receive proceeds of a $1.5 billion term loan B (aka Alpha Funds). The US Bankruptcy Court for the District of Delaware ruled against Byju’s and Raveendran in the $533 million theft case, it said.

The named parties are alleged to have “co-orchestrated and executed a lawless scheme to conceal and steal $533 million of loan proceeds”, according to Alpha’s lawsuit. It claims that the executives “deliberately hid” asset belonging to Alpha and were “repeatedly deceptive” about the location of the money “in order to steal funds rightfully owed to the lenders”.

This comes just days after Raveendran filed a first investigation report (FIR) against Pankaj Srivastava, the former resolution professional (RP), US lender Glas Trust and employees of EY, alleging fraud and conspiracy in insolvency proceedings. “FIR filed against those involved in a criminal conspiracy against BYJU’S: Pankaj, the RP who illegally handed over the insolvency process to Dinkar, Rahul & Lokesh from EY who are the agents of GLAS, a collective of crooks,” wrote Raveendran, on social networking platform X. “I am not a flower; I am the fire that will shatter GLAS.”

Attempt to divert attention, says Byju’s

Byju’s 10 April statement said, “This lawsuit is a part of their conspiracy to wrestle control of Byju’s through all possible nefarious means. It is nothing but yet 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.”

Byju’s also claimed that it had already provided full details on the use of the $1.2 billion loan through a signed affidavit submitted to the Delaware court, which it said had been deliberately ignored by GLAS. “A signed and verified affidavit that we submitted in the court of Delaware has the details of how the entire $1.2 billion loan was spent, to the last dollar. And yet, that affidavit was conveniently ignored and GLAS has continued to raise the question of the so-called missing $533 million repeatedly to mislead,” the statement added.

“The lawsuit is an attempt to divert the attention from their conspiracy along with EY to sabotage the insolvency process of Think & Learn Pvt. Ltd  is becoming public,” they said. “It is certainly no coincidence that this lawsuit was filed just days after the news of the FIR and public disclosure of the bribery video involving an Indian court official who has already admitted the fraud in his affidavit to IBBI,” the statement said.

“This is a serious FCPA (Foreign Corrupt Practices Act) violation requiring further investigation into the involvement of Vishal Chanani of Redwood, Dan Ornstein of HG Vora and Irena Goldstein of GLAS in the bribery scheme involving Pankaj Srivastava,” it added. The company also noted that GLAS, which represents disqualified lenders Redwood and HG Vora, is already under criminal investigation in India on charges of corruption and bribery, signalling at the recently filed FIR.

In its lawsuit, Alpha is seeking:

• An award of damages for Byju’s breach of fiduciary duties,
• An award of damages for Byju’s, Divya’s, and Anita’s aiding and abetting of the breach of others’ fiduciary duties;
• An accounting of the Alpha Funds;
• An award of damages for conversion and civil conspiracy;
• Reimbursement of all attorneys’ fees, costs, and expenses;
• Reimbursement of interest expenses; and
• Any other relief that the Court may deem just, proper, or equitable.