- Byjjs was once the hottest startup in India, with a range of world’s main debt and actions investors.
- A judge ruled that the entities linked to Byju had fraudulently transferred more than $ 500 million to a “simulated” hedge fund.
- Money is always missing.
Call this the case of the half-fledged dollars.
During the boom to finance startups of the pandemic time, the Société de Technique de l’Éducation Byju collected funds from some of the biggest names in global investment. At its peak, the company based in Bengaluru was estimated at $ 22 billion, making it the most precious startup in India. But last week, an American judge judged that The entities associated with ByJU had fraudulently transferred more than $ 500 million to a group that the judge deemed a “imposture”.
The summary judgment before the Delaware bankruptcy court, published Thursday, advances the search for lenders of missing money. Judge John T. Dorsey ruled against Riju Ravindran – a former member of the Board of Directors of Byju and the founder’s brother – and entities linked to the company, including a hedge fund founded by a 23 -year -old dropout.
Dorsey noted that the $ 533 million had been fraudulently transferred to what he called a “high -risk and unproven hedge fund”. He had few other investors, a high prices structure and, at some point, an address from the registered office of Miami IHOP with a phone without work, by court documents. The decision opens the door to damages – with an audience on details still planned – and so that lenders are trying to recover part of this money.
In November 2021, after the collection of funds on the actions of Blackrock, the Chan-Zuckerberg initiative and other power players, Byju set up a special financing vehicle with $ 1.2 billion in private lenders, including Ares Management and HPS Investment Partners. Directed by the founder aviator of the media Byju Raveendran, Byjjes quickly spread by taking other companies.
Months after lenders’ money entered and without their knowledge, Ravindran transferred $ 533 million to a tiny cover fund called Camshaft Capital, according to the summary judgment on Thursday. The fund was managed by a portfolio manager named William Morton, who, according to lenders, had no investment experience. The lenders’ complaint said last year that Morton had recently bought three luxury cars: a Ferrari Roma 2023, a Lamborghini Huracán Evo in 2020 and a Rolls-Royce Wraith 2014.
The lawyers of Ravindran told the bankrupt court of Delaware that he had transferred the money to the camshaft because “Byju needed to protect the money”. Ravindran declared in the testimony under oath that he had never heard of the camshaft before April 2022 and that he made no diligence before transfers.
Dorsey wrote in the summary judgment that the camshaft should have identified “many red flags” pointing towards the “fraudulent” of transactions.
The camshaft then lent the money to a British business in an agreement concluded without the approval of the lenders, Dorsey wrote. The lenders have not yet found the money, despite the detailed in -depth efforts in the court documents.
The trial of last week is only part of the winding saga of Byju, which extends on the continents and implies more than a dozen prosecution. While the level of financing of Byju commissioned its peak from the ED-TECH competition, the company is part of a wave of global startups which obtained significant funding during the pandemic. At the time, investors rushed to support companies in lower interest rates. From now on, weaker assessments on a very different market threaten these investments in good luck.
Money is “a place where lenders will never find it”
After negotiations with Byjjjs Farm about missed interest payments and other problems, lenders put the special financing vehicle in involuntary bankruptcy. They named Timothy Pohl, a veteran of restructuring, to manage the business and to unravel the key mystery: the silver path. But even after Pohl took office as a single manager in March 2023, Ravindran continued to move money, Dorsey wrote in the summary judgment on Thursday.
In May 2023, Raveendran told an adviser to lenders that money had gone “somewhere that lenders will never find him,” said in a statement.
Until now, legal proceedings have offered some clues out of the $ 533 million missing. Morton and his fund was held in the court last year for non-cooperation with Discovery. He told the Wall Street Journal last spring that it had fled the United States without pleased – and that the camshaft was not a sham.
Raveendran and Ravindran are known for the last time to live in Dubai. Ravindran was also held by the court in the court last year.
The lenders declared on Friday in a statement that they considered the decision as a “significant step” in their recovery efforts.
“We are satisfied with the court has unequivocally recognized that Riju Ravindran, Camarfaft and Byju have led together a deliberate fraud worldwide resulting from the flight of $ 533 million,” lenders in the press release said.
Byjjs is still active, but the company faces important disorders beyond the case of bankruptcy in the United States. Blackrock and at least another equity investor have struck down the value of their investments. Blackrock and the Chan-Zuckerberg initiative did not respond to requests for comments from Business Insider, or byju.
The lawyers of Morton and Ravindran did not respond to requests for comments, any more than Morton or Raveendran. Ravindran could not be located to comment.
Raveendran wrote on LinkedIn on Friday and again on Monday that he would reconstruct the company.
“I will continue to continue. Until the wrongs are straightened and the errors are corrected,” he published on Monday.
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