₹4,400 Crore Loan Fraud Case: US Bankruptcy Court Rules Against Byju's
New York (The Uttam Hindu): A Bankruptcy Court in the US on Friday issued a summary judgment against Riju Ravindran, Think & Learn (the parent company of Byju’s), and the hedge fund Camshaft Capital, finding them guilty of fraudulent transfer of $533 million (approximately ₹4,430 crores) and a “breach of fiduciary duty.”
In its ruling, the Delaware Bankruptcy Court confirmed that multiple transfers of funds from Byju’s Alpha (the US subsidiary of Byju’s) constituted actual fraudulent transfers and conversion. The court also confirmed that Riju Ravindran (brother of Byju Raveendran) violated his fiduciary duties as a director of Byju’s Alpha.
The case stems from a lawsuit filed by Byju's lenders, represented by Glas Trust LLC, in February of last year. Byju's Alpha was a special purpose financial institution created to borrow a five-year $1.2 billion (about ₹9,960 crores) term loan from Glas Trust in November 2021. Byju’s Alpha defaulted on its loan obligations in March 2022, leading to it being placed under trusteeship in March 2023.
The $1.2-billion loan was provided to Byju’s by a syndicate of 37 financial institutions. According to the lenders, Byju’s Alpha, under the control of the Raveendran family (before the brothers’ removal as director and officers of Byju’s Alpha on March 3, 2023), allegedly transferred $533 million (approximately ₹4,430 crores) of Term Loan proceeds to Camshaft Capital Fund, a purported hedge fund founded by William Morton, in 2022.
In March 2023, Byju’s Alpha’s limited partnership interest in Camshaft Capital Fund was transferred by Riju and Byju to Inspilearn LLC, and then again transferred to, and redeemed by an offshore trust of Inspilearn in February 2024. There was yet another transfer to an undisclosed entity after that, according to the lenders.
The court’s decision is a significant step forward in the lenders’ efforts to recover the stolen funds. The lenders have expressed satisfaction that the court recognized the deliberate fraud conducted by Riju Ravindran, Camshaft Capital, and Byju on a global scale.
