Byju's Founder Faces $1.07B Bill After Default Judgment in US Bankruptcy Case

Byju's founder, Byju Raveendran, has been ordered by a U.S. bankruptcy court to pay over $1.07 billion in a case related to the company's U.S. unit allegedly transferring $533 million in 2022 and failing to recover it. The Delaware bankruptcy judge issued a default judgment after finding that Raveendran had repeatedly ignored court orders and provided evasive, incomplete responses regarding the missing funds. The judge also cited issues with a separate limited-partnership stake later valued at roughly $540.6 million. The ruling, dated November 20, stems from legal action by lenders seeking to claw back funds linked to the $1.2 billion term loan they extended to the ed-tech startup in 2021. A group of U.S. lenders led by GLAS Trust sued Raveendran and his wife, Byju's co-founder Divya Gokulnath, in the Delaware bankruptcy court earlier this year, in April. The couple denied wrongdoing at the time and accused lenders of attempting a hostile takeover of the company. Byju's, one of India's most valuable startups, has been facing financial difficulties in recent years. The company's valuation has dropped significantly, and it has been struggling to meet its debt obligations. The U.S. court's ruling is a significant blow to the company's founder, Byju Raveendran, who has been a prominent figure in India's startup ecosystem. "We are disappointed with the court's ruling and will appeal it," a spokesperson for Byju's said in a statement. "We have always maintained that we have acted in good faith and have not misused any funds." The company's lawyers have argued that the lenders' claims are baseless and that the company has provided all necessary information to the court. The case highlights the risks and challenges faced by startups in the ed-tech sector. Byju's, which was once valued at over $22 billion, has been struggling to maintain its growth momentum in recent years. The company's financial difficulties have raised concerns about the sustainability of the ed-tech business model and the risks associated with investing in startups. The U.S. court's ruling is expected to have significant implications for Byju's and its founder. The company's valuation is likely to take a hit, and its financial situation may become even more precarious. The ruling may also set a precedent for other startups in the ed-tech sector, which may face similar challenges in the future. The case is ongoing, and Byju's is expected to appeal the ruling. The company's lawyers have 30 days to file an appeal, and the case is likely to drag on for several months. The outcome of the case will have significant implications for Byju's and its founder, and it will be closely watched by the startup ecosystem in India and beyond.