Byju's, the embattled tech company controlled by Indian entrepreneur Byju Raveendran, has been accused of illegally transferring funds from its U.S. affiliate, according to a lawsuit filed on Tuesday in a Delaware federal court, Bloomberg reported.
The lawsuit claims money that should have been used to pay creditors was funnelled to Whitehat Education Technology. Court-appointed trustee Claudia Springer, a bankruptcy attorney, is seeking the return of nearly $700,000 allegedly transferred from accounts under her control, per the Bloomberg report.
This legal battle is part of a broader conflict between Byju's and its lenders, who claim the edtech company owes more than $1.2 billion to them. For over a year, lenders have been trying to locate $533 million they say the company hid from them, as per the report.
The dispute stems from a Byju’s affiliate that once held the missing $533 million, which creditors took over and placed in Chapter 11 bankruptcy. Three other units were also forced into insolvency and placed under Springer's control. All U.S.-based affiliates are currently in bankruptcy court in Wilmington, Delaware, while Byju’s faces separate bankruptcy proceedings in India, as per the report.
In U.S. bankruptcy cases, court approval is generally required before funds can be moved or used, particularly in the early stages. However, lenders accuse Byju's officials of moving the $533 million in violation of these rules, per the report.
According to the complaint, funds from the affiliates’ Stripe account were transferred to a Wells Fargo account linked to Whitehat between September 26 and October 7. The Bloomberg report said Springer also alleged that individuals with Byju's-related email addresses in India had tried to access the U.S. affiliates' accounts.
Springer is pleading in the court to prevent Wells Fargo from allowing further transfers from Whitehat’s account.
Neither Stripe nor Wells Fargo have commented on the situation.
Byju’s is also facing a separate lawsuit over the $533 million linked to a shell company called Byju’s Alpha, created to access U.S. capital markets. After Byju's defaulted, lenders took control of Alpha and are suing to recover the funds they claim are rightfully theirs.
The U.S. bankruptcy case is listed as BYJU's Alpha Inc., 24-10140, in the U.S. Bankruptcy Court for the District of Delaware (Wilmington).
(With Inputs from Bloomberg)
