US court orders Byju Raveendran to pay over $1 billion in BYJU’s Alpha-GLAS Trust case

A US court has issued a default judgement holding Byju Raveendran personally liable for repaying over USD 1 billion, based on a petition filed by BYJU's Alpha and US-based lender GLAS Trust Company LLC.

The Delaware Bankruptcy Court found that Raveendran failed to comply with the discovery order and continued to be evasive on several occasions, according to the judgement issued on November 20.

"The court will enter default judgement against Defendant Raveendran...in the amount of $533,000,000, and on Counts II, V and VI in the amount of $540,647,109.29," the judgement read.

The judgement required Raveendran to deliver a complete and precise account of the Alpha Funds and any related proceeds, such as the Camshaft LP Interest, including all subsequent transfers and resulting proceeds.

BYJU's Alpha-GLAS Trust case details

BYJU's Alpha was established while Raveendran was managing the edtech company Think and Learn Private Limited (TLPL), which functioned under the Byju's brand name.

TLPL received a $1 billion Term Loan B from US-based lenders. Subsequently, the lenders alleged that BYJU's Alpha had violated the loan terms, and $533 million of the total debt had been unlawfully transferred out of the US, PTI reported.

The Glas Trust approached the Delaware court and obtained a favourable order to take control of BYJU's Alpha. Meanwhile, both BYJU's Alpha and Glas Trust filed petitions in the Delaware Bankruptcy Court for the discovery of transactions worth $533 million.

The November 20 judgement states that Raveendran was aware of the discovery order but simply refused to comply, the report said.

The court had also issued a contempt order in the matter, but noted that Raveendran continues to refuse to respond to the discovery requests or pay the sanctions he owes.

"The facts and circumstances of this case indicate that Raveendran's continuing failure to adequately respond to the pending discovery requests is a personal decision by Raveendran, himself," the judgement noted.

The court rejected Raveendran's argument that the GLAS Trust has access to documents through the books of BYJU'S Alpha on the information they are looking for. It noted that there is nothing in the record to support the assertion GLAS has access to relevant documents.

"The court has also found that Raveendran's behaviour has been a strategic pattern of willful failure to comply with discovery," the judgement said.

The court has already determined that Raveendran is in contempt of the previous discovery orders and has imposed sanctions of USD 10,000 per day until he purges his contempt.

"The monetary sanctions, however, remain unpaid and have been ineffective. Raveendran lives abroad and apparently has no intention of satisfying his financial penalties or complying with the discovery orders. Accordingly, the monetary sanctions have not provided an effective remedy, making a harsher sanction such as default judgement appropriate in this instance," it said.

Here's what Byju's lawyers say

In an official statement, J Michael McNutt, the Senior Litigation Advisor at Lazareff Le Bars Eurl, who is representing Byju's at the US court, claimed that Byju Raveendran plans to appeal against the US court order, where Byju Raveendran plans to present evidence of misrepresentation and claim $2.5 billion from GLAS before the US courts.

“We consider that the US Court erred in its judgment of this matter and will be filing the necessary appeals and other contestations related to this judgment and related Orders. The Court in our view ignored relevant facts. Byju Raveendran must be allowed to present a defense and has been denied the right to do so by expediting the trial. The judgement is a default judgment meaning that the Court issued this judgement without Byju being permitted to present a defense and instead deprived Byju of the presentation of a defense by relying on its prior Order of Contempt. The Delaware Court Judgement also 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),” said McNutt.

“Byju Raveendran has always respected the Court process. In contrast, GLAS and others have not properly informed the Court in our view and have attempted to expedite this and other Court procedures to obscure the fact that Byju Raveendran has not willfully violated any law and including any contract in this matter,” according to the official statement.

“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,” said J Michael McNutt in the statement.

“Claims are being prepared against Glas Trust and others in other 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,” according to the release.