BYJU’S Responds to Court Order
On Friday, March 15, BYJU’S issued a response to a US bankruptcy judge’s ruling ordering ‘Think & Learn’ to freeze $533 million. The judge issued the order on March 14 in a Delaware court to safeguard the funds for lenders who assert that the money should only be utilized to repay them.
Assertion of Fund Safety
BYJU’S
stated that the order simply upholds the existing situation since they have consistently asserted that the funds are securely held in one of their subsidiaries, where they will remain as directed by the order.
Court’s Denial of Primary Relief
As per Bloomberg, “Think & Learn Private Limited, operating as BYJU’S, offers online educational services.” BYJU’S emphasized in their statement that the court declined the primary relief sought by the plaintiffs, which was to deposit the funds into court. Previously, lenders had taken control of BYJU’S Alpha, a holding company set up by Think & Learn to issue $1.2 billion in debt, and it is now under the oversight of the US judge. Ravindran is appealing a decision by Delaware’s Chancery Court to approve that seizure.
“The court denied the primary relief sought—that a mandatory injunction be issued to deposit the funds into court. We consistently maintained that the lenders last year were aware of the situation regarding the $500m in BYJU’S Alpha,” stated the edtech major.
BYJU’S further alleged that certain entities, including an alleged ad hoc group, were collaborating with significant investors to exploit the situation for their own gain.
Riju Ravindran’s attorney, Sheron Korpus, argued on March 14 that the lenders bear responsibility for any financial difficulties experienced by Think & Learn. Additionally, Ravindran testified that three of Think & Learn’s six directors had resigned, leaving only himself, his brother, and his sister-in-law in charge of the company.
Legal Proceedings and allegations
In the murky backdrop of the situation, during the bankruptcy hearing on Thursday in Wilmington, Delaware, Judge John T. Dorsey ordered the arrest of William C. Morton, the founder of a small Florida hedge fund, for refusing to disclose where Think & Learn purportedly concealed the cash. Morton must also pay $10,000 a day until he provides information about the money, which was briefly entrusted to the hedge fund Camshaft Capital Fund, the judge stipulated.
Background of the Dispute
The missing funds lie at the core of a dispute between lenders owed more than $1.2 billion and Think & Learn. According to BYJU’S Alpha lawyer Benjamin Finestone, the $533 million was transferred to Morton’s hedge fund and subsequently transferred to an undisclosed offshore trust.
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