Byju’s Accused of Illegally Moving Funds Through Shell Company Amid Bankruptcy Battle

Byju’s, the troubled Indian tech company led by entrepreneur Byju Raveendran, is facing accusations of illegally moving funds from its U.S. affiliates, according to a lawsuit filed in Delaware federal court on Tuesday, Bloomberg reported.

The lawsuit claims that instead of using money to pay off creditors, funds were transferred to Whitehat Education Technology, a shell company. Court-appointed trustee Claudia Springer, a bankruptcy attorney, is now seeking the return of nearly $700,000 that was allegedly moved from accounts under her control.

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This legal clash is part of a larger dispute between Byju’s and its lenders, who say the edtech giant owes them over $1.2 billion. For over a year, lenders have been searching for $533 million they allege Byju’s has been hiding, according to the report.

The conflict involves a Byju’s affiliate that once held the missing $533 million, which was placed under Chapter 11 bankruptcy by creditors. Three other U.S.-based units are also under bankruptcy protection and are now controlled by Springer. The U.S. affiliates are facing bankruptcy in a Delaware court, while Byju’s is also dealing with separate bankruptcy proceedings in India.

In U.S. bankruptcy cases, any transfer of funds usually needs court approval, especially in the early stages. However, lenders allege that Byju’s officials moved the $533 million without following these rules, the report said.

The complaint claims that funds from the affiliates’ Stripe account were transferred to a Wells Fargo account linked to Whitehat between September 26 and October 7. Springer also noted that individuals with Byju’s-related email addresses in India had tried to access the U.S. affiliates’ accounts.

Springer is asking the court to stop Wells Fargo from allowing any further transfers from Whitehat’s account.

Meanwhile, Byju’s is facing another lawsuit over the missing $533 million, which is tied to a shell company called Byju’s Alpha, created to tap into U.S. capital markets. After Byju’s defaulted, lenders took over Alpha and are now suing to recover the funds they claim belong to them.

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).