SUMMARY
- Byju’s accused of siphoning $700,000 from US affiliates in bankruptcy violation.
- Lawsuit filed by Claudia Springer, the court-appointed trustee, amid $1.2 billion debt.
- Lenders claim Byju concealed $533 million, leading to legal battles in US and India.
A lawsuit filed in federal court in Delaware has revealed that a software company controlled by Indian entrepreneur Byju Raveendran allegedly siphoned cash from its US affiliates, violating bankruptcy rules. The complaint, lodged by Claudia Springer, the court-appointed trustee for these affiliates, seeks to recover nearly $700,000 that was improperly transferred to Whitehat Education Technology, a company associated with Byju’s.
This case forms part of a larger conflict between Byju’s and its lenders, who are owed over $1.2 billion. For more than a year, these lenders have been attempting to track down $533 million that Byju allegedly concealed from them.
A representative for Byju’s did not respond to requests for comment. The Byju’s affiliate in question, which previously held the missing funds, has been taken over by lenders and placed into Chapter 11 bankruptcy, while three other related units are undergoing insolvency proceedings under Springer’s oversight. These entities are currently in bankruptcy court in Wilmington, Delaware, while Byju’s itself is also facing bankruptcy proceedings in India.
Under US bankruptcy law, particularly in the early stages of a case, funds cannot typically be transferred or utilized to settle debts without court approval. Lenders accuse Byju’s officials of improperly transferring the $533 million in contravention of these rules. Between September 26 and October 7, transactions were made from the US affiliates’ Stripe Inc. account, directing funds to a Wells Fargo account linked to Whitehat, as detailed in the lawsuit.
Springer further alleges that individuals in India, using Byju-related email addresses, have attempted to access the accounts of the US debtors, as evidenced by images from the Stripe account history included in the complaint. She has requested a court order to prevent Wells Fargo from facilitating any fund transfers from Whitehat’s account.
Byju’s is also facing a fraudulent-transfer lawsuit related to these funds in a US bankruptcy court. This lawsuit pertains to Byju’s Alpha, a shell company established to engage with US capital markets. Following Byju’s default, lenders took control of this shell company, placed it under court protection, and are pursuing the $533 million they assert rightfully belongs to them.
