US Lawsuit Claims Byju's Siphoned-Off Money From US Affiliates
US Lawsuit Claims Byju's Siphoned-Off Money From US Affiliates
It transferred $700,000 amid bankruptcy proceedings
A lawsuit filed in the Delaware Federal Court said that Byju's, a software company controlled by Indian entrepreneur Byju Raveendran has drained cash from US affiliates in violation of US bankruptcy rules.
The lenders sought to recover $533 million (allegedly hidden by Byju's), involving complex legal battles in the US and India.
A court-appointed trustee for the affiliates said that the amount meant for repaying creditors was instead siphoned off to Whitehat Education Technology.
The trustee, bankruptcy attorney Claudia Springer, sued to get back nearly $700,000 from entities under her control.
The dispute is among the many between Byju's, and lenders owed more than $1.2 billion. For over a year, the lenders tried to track down $533 million that the company allegedly hid from them.
A Byju's affiliate that once held the missing $533 million was taken over by lenders and put into Chapter 11 bankruptcy. Also, three other units were forced into insolvency and placed under Springer's control.
The US-based entities are in bankruptcy court in Wilmington, Delaware, while Byju's is facing bankruptcy proceedings in India.
(In the US, when a company comes under court protection, initially, cash cannot be moved or used to pay bills without the judge's approval). However, Byju's violated the rules.
Between 26 September and 27 October, the US affiliates' Stripe Inc account transferred the funds from the bankrupt companies to a Wells Fargo bank account associated with Springer.
Meanwhile, Springer alleged that individuals in India have been attempting to access the US debtors' account from Byju's email account. The company sought a court order preventing Wells from transferring funds out of Whitehat's account.
Byju's faces a fraudulent transfer lawsuit in a US bankruptcy court related to that. The case involves Byju's Alpha, a shell company created to tap US capital markets.
But after Byju's defaulted, the lenders seized control of the shell company, put it under court protection, and sued to get the money back.
