Whalesbook
Byju Raveendran, co-founder of BYJU'S, has strongly refuted allegations of diverting $533 million from the edtech firm's US entity, BYJU'S Alpha. He has termed the claims made in the US Delaware Bankruptcy Court as "false, misleading and defamatory." Raveendran stated that these accusations are based on selective and incomplete information from OCI CEO Oliver Chapman and promised that forthcoming filings will rebut all assertions. He also indicated plans to initiate defamation proceedings against those involved.
BYJU'S co-founder Byju Raveendran has categorically denied allegations surfacing in the US Delaware Bankruptcy Court concerning the alleged diversion of $533 million belonging to BYJU'S Alpha, the edtech company's US-based entity. Raveendran described the claims as "false, misleading and defamatory," asserting that the arguments presented by the debtors are based on a "selective and incomplete" declaration by OCI CEO Oliver Chapman.
Raveendran stated that Chapman's testimony is filled with conjectures and insinuations and does not substantiate any claims of wrongdoing by BYJU'S founders. He emphasized that Chapman's declaration reflects his limited knowledge of specific expenditures by OCI and does not prove any fund diversion by the founders.
Oliver Chapman's sworn declaration, filed as part of BYJU'S Alpha's settlement with creditor Glas Trust, contradicts an earlier affidavit from Raveendran. Chapman alleged that the funds were not used for procurement or marketing as claimed by Raveendran. Instead, he stated that the "vast majority" of the money was moved through opaque transfers to a Singapore-based entity, BYJU'S Global Pte Ltd, which he claimed was personally owned by Raveendran. This conflicts with Raveendran's previous sworn statement that funds sent to OCI were for "legitimate commercial purposes," including procurement of tablets, IT equipment, and marketing services.
BYJU'S plans to provide evidence in its upcoming US filings to rebut each assertion. Furthermore, Raveendran intends to initiate defamation proceedings against individuals and entities disseminating these alleged false statements.
This situation is part of a larger crisis for BYJU'S, once a highly valued Indian startup. The company has faced years of aggressive expansion, opaque financial practices, and increasing debt, leading to governance issues, auditor resignations, layoffs, and lawsuits from lenders. Currently, BYJU'S parent company, Think & Learn, is undergoing insolvency proceedings. Edtech firm upGrad and Manipal Education & Medical Group (MEMG) have expressed interest in acquiring BYJU'S assets.
Impact
This news severely impacts BYJU'S reputation and its ongoing legal battles, potentially affecting investor confidence in the broader Indian edtech sector. The allegations of fund diversion and subsequent legal actions, alongside insolvency proceedings, highlight significant governance and financial challenges. The company's ability to secure future funding or undergo a successful restructuring is now heavily questioned.
Rating: 7/10
Difficult Terms:
Bankruptcy Court: A specialized court that handles cases of individuals or companies unable to repay their debts.
Allegations: Claims that someone has done something illegal or wrong, which have not yet been proven.
Diversion of Funds: The act of using money from its intended purpose or recipient for another, often unauthorized, purpose.
Affidavit: A written statement confirmed by oath or affirmation, for use as evidence in court.
Opaque Transfers: Financial transactions that are unclear, secretive, or difficult to understand, making it hard to trace the flow of money.
Creditor: A person or entity to whom money is owed.
Defamatory: Harmful to someone's reputation; damaging.
Insolvency Proceedings: Legal processes initiated when a company or individual cannot pay its debts, often leading to the liquidation or restructuring of assets.
