Byju’s founder allegedly used hidden funds to regain control of company: report

Last updated:November 21, 2024, 12:39 IST

In India, Byju’s is facing bankruptcy proceedings, with a court-appointed professional working to raise funds to repay creditors.

Byju Raveendran (file photo)

Edtech giant Byju’s founder Byju Raveendran reportedly tried to use hidden loan proceeds to secretly buy back Epic!, a US-based education software company that was acquired by an American trustee, court documents show.

Byju Raveendran’s alleged attempt to take back control

Raveendran is trying to regain control of his troubled education technology empire amid ongoing legal battles, according to Nebraska businessman William R. Hailer. Bloomberg reported.

Byju’s struggles in the US and India

Byju’s is under court supervision both in India, where its parent company is based, and in the US, where some of its most valuable units are located.

Allegations of loan manipulation

According to the Bloomberg According to a report, Raveendran allegedly recruited Hailer, a former political consultant, to help buy back US creditors who owed more than $1.2 billion on a bad loan. The proposed plan involved swapping the debt, which was trading at just 0.24 cents on the dollar, for ownership of Epic! But the attempt failed, according to documents filed with the U.S. Bankruptcy Court in Delaware.

Statement against Raveendran

In his court statement, Hailer accused Raveendran of exploiting him. “Over the last few months, I have been used as a pawn in Byju’s manipulation of the law,” Hailer said. He is scheduled to testify on behalf of a trustee representing Epic! wants to sell to raise money for Byju’s creditors.

Financial transactions under scrutiny

Hailer announced that Raveendran transferred $11.25 million to Rose Lake Inc., a company run by Hailer, as part of a strategy to demonstrate financial stability to lenders. The funds came from OCI Ltd., a U.K.-based logistics company that received hundreds of millions in loan proceeds that are now being claimed by U.S. creditors.

Allegations of embezzlement

Lenders allege Raveendran concealed $533 million in loan proceeds that were intended for repayment. While Raveendran denied any wrongdoing and claimed his actions were a response to aggressive creditor tactics, lenders have filed lawsuits in both U.S. and U.S. federal courts to recover the funds.

Further implications

In India, Byju’s is facing bankruptcy proceedings, with a court-appointed professional working to raise funds to repay creditors. The ongoing legal disputes in both countries highlight the precarious position of the edtech giant as it struggles to stabilize its finances and operations.