In a major legal blow, Byju Raveendran, the founder of the Indian ed-tech giant Byju's, has been ordered by a U.S. court to pay over $1 billion. Raveendran is strongly denying any wrongdoing and has vowed to appeal the decision, calling the ruling a mistake.
This case marks a dramatic turn for a founder who was once celebrated as a star of India's startup boom.
What Did the Court Order?
A bankruptcy judge in Delaware issued a default judgment against Raveendran. This means the judge ruled against him because he repeatedly failed to follow court orders.
The judge found that Raveendran:
* Skipped court hearings.
* Missed multiple deadlines.
* Provided "evasive and incomplete" answers to the court.
* Ignored a previous contempt order that required him to pay $10,000 daily in sanctions, which have gone unpaid.
The judge, Brendan Shannon, called the circumstances "unique and unlike anything" he had seen before, justifying the "extraordinary" ruling.
The Heart of the Dispute: The Missing $1.2 Billion Loan
The legal battle stems from a massive $1.2 billion term loan that Byju's secured from a group of U.S. lenders in 2021.
The court's ruling focuses on two main issues:
1. The $533 Million Transfer: Lenders alleged that in 2022, Byju's U.S. unit, called Alpha, transferred $533 million of the loan money and never recovered it. The court demanded answers about where this money went, but found Raveendran's responses unsatisfactory.
2. The $540.6 Million Stake: The judge also cited problems with a separate limited-partnership stake later valued at roughly $540.6 million.
Combined, these two amounts form the basis of the more than $1.07 billion Raveendran has been ordered to pay.
Byju's Founder's Response and Appeal Plans:
Byju Raveendran and his legal team are fighting back. They have stated they will file appeals to challenge the judgment.
His legal counsel, J. Michael McNutt, argued that:
* The court made an error and "ignored relevant facts."
* Raveendran was not given a proper opportunity to present his defense.
* The lenders, led by GLAS Trust, were aware that the $533 million was not used for the personal benefit of the founders, but for the parent company, Think and Learn.
A History of Legal Battles:
This is not the first legal action between the two sides. The conflict has been escalating for months:
* In April, lenders led by GLAS Trust sued Raveendran and his wife (and co-founder) Divya Gokulnath over the missing $533 million.
* The founders accused the lenders of attempting a "hostile takeover" of the company.
* They also threatened a $2.5 billion lawsuit against GLAS Trust in India and other jurisdictions, though no such case has been publicly filed yet.
What's Next For Byju's?
This ruling is a significant setback for Raveendran and his company. Byju's was once India's most valuable startup, worth $22 billion, and backed by major investors like Tiger Global and the Chan Zuckerberg Initiative.
Today, the company faces a perfect storm of lawsuits, a funding drought, mass layoffs, and a battle for control.
Meanwhile, In India:
Byju's is undergoing a separate, court-supervised sale process after insolvency proceedings began last year. Companies like Manipal Education and Medical Group (MEMG) and UpGrad have shown early interest as potential bidders.
The parties in the U.S. case now have seven days to respond to the latest ruling, setting the stage for a prolonged and high-stakes legal appeal.
