A lawsuit filed in Delaware federal court has exposed allegations against Byju Raveendran, founder of Indian edtech giant Byju’s, over the improper transfer of nearly $700,000 from its US affiliates. The complaint, lodged by Claudia Springer, the court-appointed trustee overseeing the bankruptcy of these affiliates, claims that the funds were unlawfully moved to Whitehat Education Technology, a company associated with Byju’s, in violation of US bankruptcy rules.

This lawsuit forms part of a larger dispute between Byju’s and its lenders, who are owed more than $1.2 billion. The lenders have been in pursuit of $533 million that Byju’s allegedly concealed from them. For over a year, they have been working to trace the missing funds, which they claim were improperly transferred.

The US affiliate in question, previously responsible for holding these funds, has since been taken over by the lenders and placed into Chapter 11 bankruptcy. Three other related units under Byju’s are also undergoing insolvency proceedings under Springer’s oversight. The court case involving these entities is currently being heard in Wilmington, Delaware, while Byju’s faces additional bankruptcy proceedings in India.

Under US bankruptcy law, funds cannot typically be transferred or used to settle debts without court approval, particularly in the early stages of a case. Lenders allege that Byju’s officials violated these rules by transferring $533 million from the US affiliates. According to the lawsuit, funds were directed from the affiliates’ Stripe Inc. account to a Wells Fargo account linked to Whitehat Education Technology, between September 26 and October 7.

Springer’s complaint further details that individuals in India, using Byju-related email addresses, allegedly attempted to access the accounts of the US debtors. Images from the Stripe account history were included in the complaint as evidence. To prevent further unauthorized transactions, Springer has requested a court order to block Wells Fargo from facilitating any fund transfers from Whitehat’s account.

Byju’s is also dealing with a separate fraudulent-transfer lawsuit related to these funds, brought forth in a US bankruptcy court. This case involves Byju’s Alpha, a shell company created to engage with US capital markets. Following Byju’s default on its loans, lenders took control of this entity and are actively seeking the $533 million they believe rightfully belongs to them.

A representative for Byju’s has not responded to requests for comment on the case.

Key Highlights:

• Lawsuit Filed: Byju’s faces legal action for improper cash transfers from US affiliates, totaling $700,000.
• Bankruptcy Violation: The transfers allegedly violate US bankruptcy rules.
• Lenders Pursuit: Lenders seek to recover $533 million they claim was concealed by Byju’s.
• Bankruptcy Proceedings: Byju’s is undergoing bankruptcy processes in both the US and India.