The steering committee of the ad hoc group of term loan lenders (the “Lenders”) of the $1.5 billion Term Loan B (the “Term Loans”) provided to BYJU’S Alpha, Inc. (“BYJU’s Alpha”), a Delaware special purpose financing vehicle established by BYJU’S to receive proceeds of the Term Loans, today announced that the Honorable Judge John T. Dorsey of the United States Bankruptcy Court for the District of Delaware (the “Court”) issued an order granting summary judgment (the “Order”) in favor of BYJU’s Alpha, Inc. against Riju Ravindran, Camshaft Capital Fund, LP and its affiliates, and Think & Learn Pvt Ltd (“T&L” ) (d.b.a. BYJU’S) (the “Defendants”).

The Order finds that the Defendants, alongside Byju Raveendran, are responsible for orchestrating and executing an unlawful scheme that defrauded the Lenders. Damages are to be awarded at a later date.

In making its ruling, the Court confirmed that the multiple transfers of funds from BYJU’s Alpha constituted actual fraudulent transfers and conversion (i.e., theft). The Court also confirmed that Riju Ravindran violated his fiduciary duties as a director of BYJU’s Alpha.

In connection with the Order, the Lenders issued the following statement:

“We are gratified the Court unequivocally recognized that Riju Ravindran, Camshaft, and BYJU’s together conducted a deliberate fraud on a global scale arising from the theft of $533 million. This is a significant step forward in the Lenders’ efforts to recover the stolen funds that are rightfully owed to them.”

Relevant commentary from the Judge is below:

Fraudulent Transfers

• “Only a few months after executing the Credit Agreement, in March and April of 2022, the Debtor [under Riju Ravindran] and its affiliates failed to satisfy certain loan covenants, which constituted defaults of the Term Loan. Within weeks of the defaults, the Debtor [under Riju Ravindran] began to move funds through a series of four transfers (together, the “Transfers”).”
• “Considering all the evidence before me, I find there to be no genuine issue of material fact as to the Debtor’s [under Tim Pohl] claim that the First Transfer is an actual fraudulent transfer as to Camshaft.”
• “Having considered the evidence presented by Debtor [under Tim Pohl], and the lack of any opposing evidence from T&L, I am satisfied that Debtor [under Tim Pohl] has established that the Second Transfer was made with fraudulent intent.”

Byju’s & Riju’s Deceptions

• “Byju Raveendran (the Debtor’s founder, and self-appointed CEO, T&L’s CEO, and Riju Ravindran’s older brother told the Lenders’ senior financial advisor, Stephen Spencer, in reference to the Alpha Funds, that the Debtor “doesn’t have the money[.]” Rather, “the money is someplace the Lenders will never find it.””
• “Defendants concealed the whereabouts of the Alpha Funds on multiple occasions. They (i) failed to furnish financial statements that would have revealed where the Alpha Funds were transferred, (ii) refused GLAS’s and the Lenders’ basic information requests, (iii) made additional transfers when Plaintiffs came close to finding the Alpha Funds, (iv) orchestrated the sham resignation of Ravindran to facilitate the Fourth Transfer, and (v) repeatedly violated the Court’s discovery orders, all to keep the Alpha Funds away from the Debtor and its creditors.”
• “To date, Ravindran has failed to respond to discovery requests and Debtor has been unable to identify which T&L subsidiary holds the funds.”
• “Simply put, Ravindran’s argument makes no sense.”

Think & Learn’s Involvement

• “Considering the extensive evidence suggesting T&L’s creation of a U.S. subsidiary which was then used to perpetrate a fraud, I find that under the circumstances of this case, the exercise of jurisdiction over T&L is reasonable.”
• “T&L (on whose board Ravindran sat) actively misled the Lenders into believing that the funds remained in the Debtor’s bank accounts in cash or cash equivalents.”
• “As with the First Transfer, it was T&L who made the ultimate decision and directed the transfer, with Ravindran merely signing documents without asking questions.”
• “The evidence makes clear that as of March 3, 2023, Pohl was the only party with corporate authority to direct the use, possession, transfer, or disposition of the property of the Debtor. Because T&L and Ravindran lacked corporate authority to exercise control over the Debtor’s property on March 31 the transfer of the LP Interest was a wrongful disposition of the Debtor’s property. This constitutes conversion under applicable law.”

Camshaft

• “GLAS’s investigator concluded that the hedge fund was a sham, and I agree. It is unclear why the Debtor’s would choose to invest in Camshaft Fund at all.”

Background

In 2021, BYJU’s Alpha was established as a U.S. subsidiary of BYJU’s to receive proceeds of the Term Toan. In 2022, BYJU’s Alpha, under the control of the Raveendran family (and prior to the brothers’ removal as director and officers of BYJU’s Alpha on March 3, 2023), transferred $533 million in Term Loan proceeds to Camshaft Capital Fund, LP, a sham hedge fund founded by William Morton. In March 2023, BYJU’s Alpha’s limited partnership interest in Camshaft Capital Fund was transferred by Riju and Byju to Inspilearn LLC, and then again transferred to, and then redeemed by an offshore trust of Inspilearn in February 2024. Subsequently, there was yet another transfer to a still undisclosed entity.

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