US court orders Byju's to freeze $533 million owed to lenders

New York, March 15 (IANS) The steering committee representing term-loan lenders of Byju's $1.2 billion loan on Friday said that a US judge has ordered to prohibit further movement or use of $533 million by the edtech company, which is owed to lenders.

According to the steering committee's statement, the company's co-founders Byju Raveendran and Divya Gokulnath are prohibited by the judge from further transferring or using any of the $533 million in loan proceeds previously held by Camshaft Capital Fund, and subsequently transferred to an unnamed and unknown offshore trust.

The court also found that Raveendran and Gokulnath "are working in concert with the defendants and ordered them to comply with its ruling".

In its ruling, the court confirmed that the transfer of funds from Byju's Alpha, the edtech firm's US subsidiary, and their continued concealment, "likely constitutes a fraudulent conveyance".

"The fact that the parent company is attempting to hide where the assets are is huge. It shows that they are engaged in what appears to be a potential fraud," the judge said in its order.

"Raveendran... either was being untruthful or he's the most incompetent officer or director of a company in Delaware history.”

Additionally, the court ordered the arrest of William Morton, the founder of Camshaft Capital Fund, following his repeated refusal to appear in court and provide any of the requested information regarding the transfers of the $533 million in loan proceeds and the current status and location of the funds.

The ruling confirms that “Byju Raveendran himself is acting in concert with, among others, his brother, Riju, his wife, Divya, and fugitive William Morton, and that these individuals are continuing to intentionally defraud Byju's lenders," claimed the lenders' steering committee.

The court-ordered freezing of assets is "an important step towards recovering the missing $533 million, and we will take all necessary legal actions to recover what we are rightfully owed".