Byju’s crisis: Byju Raveendran tried to secretly buy back company with hidden funds, says report

Byju’s founder Byju Raveendran reportedly attempted to use loan proceeds, allegedly hidden from US lenders, to secretly buy back a software company taken over by an American trustee, as per a new court filing. Raveendran has been striving to regain control of his struggling education technology empire, which is under court supervision in both India and the US, according to a court declaration by Nebraska businessman William R Hailer.

According to a report in Bloomberg, Raveendran allegedly enlisted Hailer, a former political consultant, to negotiate with US creditors owed more than $1.2 billion under a loan, the filing with the US Bankruptcy Court in Delaware states. Raveendran aimed to swap that debt, trading at about 0.24 cent on the dollar as of Wednesday evening, for ownership of Epic!, an education-software firm. 

“Over the last several months I have been used as a pawn in Byju’s manipulation of the law,” Hailer stated in his testimony. 

Raveendran had earlier blamed his creditors who he said specialised in extracting money from distressed companies by deploying aggressive tactics.

As per the report, when Hailer began negotiations with lenders, Raveendran transferred $11.25 million to a company run by Hailer, called Rose Lake Inc. Hailer was expected to use the funds to demonstrate to lenders that he was well-funded, before returning the money to Raveendran, according to Hailer.

According to the court documents filed by Hailer, the funds from UK-based logistics company OCI Ltd, amounting to hundreds of millions of dollars, were loan proceeds that US lenders are trying to recover. Hailer claims he tried to gather evidence that OCI still held money for Byju’s, despite Raveendran’s assertions that the funds were fully utilized.

Hailer maintained regular communication with Raveendran and other associates linked to Byju’s in India. He even traveled to Dubai for discussions with Raveendran’s family and investors purportedly backing Raveendran’s efforts to regain control of Byju’s. 

Lenders have been engaged in legal battles with Byju’s in US courts for over a year, accusing Raveendran of hiding $533 million in loan proceeds that should have been returned to creditors.

Meanwhile, Byju’s is facing insolvency proceedings in India. A court-appointed professional is responsible for raising funds to repay the lenders, as the company navigates through financial challenges.