Mumbai: With a series of litigations ongoing in the US courts, a fresh lawsuit was filed recently against Byju’s company in a Delaware court, according to a Bloomberg report. A software company, owned by Raveendran, got money transferred from its US branches, which is in contravention of the US bankruptcy rules, said the report. Funds that ought to be used to repay creditors were instead siphoned off to Whitehat Education Technology, a court-approved trustee for the affiliates said in court papers.
The bankruptcy attorney of the case, Claudia Springer, filed a lawsuit against Byju’s with an intent to recover around $7,00,000 that was transferred from companies that are overseen by her. According to the lawsuit, funds from the US accounts were transferred to a Wells Fargo account associated with WhiteHat. The duration of the money transfer was reportedly between September 27 and October 7, 2024. However, in a recent filing in a US bankruptcy court, Raveendran disclosed that Byju’s utilised the $1.2 billion term loan for “legitimate business operations”.
According to a report by Economic Times, Raveendran said in the filing, “We decided to utilise the proceeds of our 'Term Loan B' towards aggressive global organic and inorganic expansion.” Subsequently, the total marketing and branding cost for this expansion was more than $ 200 million, the filing read, adding that the company also completed multiple small global acquisitions and set up offices in seven new countries. “Around $300 million was incurred towards funding the losses incurred in Tangible Play, which was the vehicle for our expansion in North America,” Raveendran added.
Apart from the lawsuits in the US, Byju’s is also battling the insolvency application filed by the Board of Control for Cricket in India. The cricket board has filed insolvency charges for an estimated £15 million in unpaid sponsorship fees. Additionally, the Qatar Investment Authority has also registered a case in Bengaluru, where Byju’s is headquartered, to recover more than $200 million from Raveendran. As a result of several litigations filed against the company, Byju’s has been unable to access its accounts and pay salaries to its employees.
According to a report in Financial Times, Raveendran, in an email to Byju’s employees, said, “I have felt like a man screaming into a hurricane of hurdles. When we regain control, your salaries will be paid promptly, even if that means raising more personal debt.”
In the face of mounting legal battles, financial struggles and a dramatic fall in valuation, Raveendran's rise to the top has been followed by a steep decline. Despite the ongoing insolvency cases and lawsuits in both the USA and India, he remains determined to fight. “I will fight it out because we will win eventually,” Raveendran was quoted by the Financial Times.
His journey from building India's most valuable startup to facing a cascade of financial and legal troubles reflects the volatility of the global ed-tech market. While Byju’s once thrived on the back of rapid expansion and aggressive marketing, the combination of post-Covid economic shifts and rising interest rates has severely impacted its fortunes. It remains to be seen whether Byju’s, the only Indian ed-tech firm with a presence in over 20 countries, can reclaim its former glory.