US bankruptcy court holds Byju Raveendran in contempt for failing to comply with orders
A prior bankruptcy court ruling had found that multiple fraudulent transfers and theft had occurred.
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The US Bankruptcy Court for the District of Delaware has issued an order holding Byju’s founder, Byju Raveendran, in civil contempt for failing to comply with earlier court directives related to limited expedited discovery.
“This court has personal jurisdiction over Raveendran,” the order, issued on Monday, states. The Economic Times has reviewed a copy of the document.
The court has further ordered Raveendran to comply with its discovery directives. “Raveendran shall remit to the clerk of court the sum of $10,000 for each day he remains in contempt of the orders,” the ruling says.
In American legal terminology, ‘discovery’ refers to the formal process by which parties obtain evidence and information from one another ahead of trial.
According to sources, the judge observed that Raveendran missed all deadlines, failed to appear in court, and did not provide significant documents. “I have seen a lot, but I have not seen strategic and patterned failure to provide meaningful, substantive responses to very basic and cogent questions that have gone on for more than a year,” the judge reportedly said.
J Michael McNutt, senior litigation advisor at Lazareff Le Bars Eurl, who represents Byju, responded: “Byju will address the order in due course and reserves all rights. I wish to make clear that this order relates only to discovery requested by the opposing parties. Byju contests the jurisdiction of the court over him and reserves all rights.”
Last month, The Economic Times reported that Byju’s was selling its US assets for a fraction of their purchase price, as creditors sought to recover debts. Proceeds from these sales were intended to repay Byju’s creditors.
On 10 April, lenders filed a lawsuit in the US against Raveendran, his wife Divya Gokulnath, and former company executive Anita Kishore. The lawsuit alleges the three orchestrated a scheme to conceal and misappropriate $533 million from funds lent to Byju's Alpha—a special-purpose financing vehicle set up in the US to receive the loan.
A prior bankruptcy court ruling had found that multiple fraudulent transfers and theft had occurred. According to the lenders, the court also determined that suspended director Riju Ravindran, Byju Raveendran’s brother, breached his fiduciary duties as a director of Byju’s Alpha.
Meanwhile in India, both brothers have petitioned the National Company Law Tribunal (NCLT) seeking to stay the committee of creditors (CoC) and remove the resolution professional (RP). This move follows steps taken by the RP for Think & Learn to withdraw certain legal proceedings in a New York court, according to lawyers representing the founders.
The RP has also filed an application seeking Raveendran’s removal from the board of directors of Aakash Institute, the coaching centre operator in which Think & Learn holds a minority stake.
Separately, Glas Trust, which represents Byju’s US lenders, filed an application to prevent Aakash from amending its articles of association, arguing the proposed changes would harm the interests of minority shareholders.
