A top official at Indian tech firm Byju's violated fiduciary duty to lenders by wrongfully concealing $533 million from them, according to a US court ruling Friday, a victory for creditors attempting to collect on a defaulted $1.2 billion loan.
Byju's fraudulently transferred at least some of the money to a small hedge fund in Miami to keep it out of the hands of lenders, according to US Bankruptcy Judge John Dorsey. According to Dorsey, the two rulings entitle lenders to collect a financial damages award from the company, the amount of which will be determined in a separate hearing.
The ruling is another setback for Byju's, the technology company founded by controversial entrepreneur Byju Raveendran and his family, which is facing bankruptcy proceedings in both the United States and India. Lenders in the United States are fighting to recoup payments by liquidating domestic education software companies that Byju's purchased for $820 million a few years ago.
"This is a significant step forward in the lenders' efforts to recover the stolen funds that are rightfully owed to them," a group of lenders who have been leading the fight said in an emailed statement following the US court ruling. Dorsey found that Raveendran's brother, Riju Ravindran, had violated his fiduciary duty.
Lenders are also attempting to collect payment through the Indian bankruptcy, though it is unclear how much value remains in the Byju's business.
Earlier this year, lenders won another victory in India when a court appointed Glas Trust Co., the lenders' agent, to an influential creditors committee in Byju's insolvency case. The court also determined that a court-approved restructuring official had improperly removed Glas Trust from the committee last year and ordered an investigation.
The US bankruptcy case is BYJU's Alpha Inc., 24-50013, US Bankruptcy Court District of Delaware (Wilmington).
