A director of Indian tech firm Think & Learn Pvt faces financial penalties for defying a US judge’s order to find out where the troubled company stashed $533 million that jilted lenders say should go to them.

Riju Ravindran, the brother of company founder Byju Raveendran, not only failed to make a serious effort to find out what happened to the cash, but deceived the court, US Bankruptcy Judge John Dorsey said during a hearing Tuesday in Wilmington, Delaware.

“I conclude Mr. Ravindran’s testimony is not truthful,” Dorsey said. Ravindran either knows where the money is being hidden and won’t say, or he refused to find out, Dorsey said. 

The decision was a symbolic victory for lenders, represented by their agent, Glas Trust, and likely puts only limited pressure on Ravindran to cooperate in order to avoid financial penalties. Dorsey said he would hold a hearing to decide how much Ravindran must pay in fines and whether the businessman has any assets subject to court jurisdiction.

Ravindran, his brother and his sister-in-law are the only directors of Think & Learn, which operates under the name Byju’s, according to court testimony. Dorsey has repeatedly expressed frustration over the company’s refusal to say where the money is being held. Earlier this year the judge ordered the arrest of a hedge fund manager who helped Ravindran move the cash. That manager refused a court order to reveal what happened to the money, Dorsey found. 

Dorsey declined to issue an arrest warrant for the Ravindran, who is an Indian citizen currently living in Dubai, a city in the United Arab Emirates, which does not have an extradition treaty with the US. 

A representative for Think & Learn did not immediately respond to a request for comment. During the hearing, Ravindran’s attorney, Sheron Korpus argued that his client did everything he could to find the money, but that his brother, Byju Raveendran and Byju’s wife claimed they didn’t know. 

“Everybody has their own family dynamic,” Korpus told the judge.

The missing money is at the heart of a fight between lenders owed more than $1.2 billion and Think & Learn. The two sides are battling in courts in Delaware and New York. Lenders had previously seized control of a holding company set up by Think & Learn to issue $1.2 billion in debt. That unit, Byju’s Alpha, is now in bankruptcy under Dorsey’s oversight. Ravindran is appealing a decision by Delaware’s Chancery Court approving that seizure.

The US bankruptcy case is BYJU’s Alpha Inc., 24-10140, US Bankruptcy Court District of Delaware (Wilmington).

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Byju’s has announced change in sales strategy.
| Photo Credit: REUTERS

Edtech firm Think and Learn – owner of Byju’s brand – has slashed course subscription fees by 30-40% and hiked sales incentives by 50-100%, according to sources.

Byju’s Founder and CEO Byju Raveendran, who has started handling the company’s daily operations, in a meeting with 1,500 sales associates and managers, has announced change in sales strategy inclined towards scalability and flexibility.

“The annual subscription for the Byju’s Learning App is now available at a yearly early price of ₹12,000 (inclusive of taxes), while Byju’s classes and Byju’s Tuition Centres (BTC) are priced at ₹24,000 and ₹36,000, respectively, for a complete year of classes,” sources privy to the development said.

This is almost a 30-40% reduction in rates, they said.

Byju Raveendran has also promised to settle all dues of the sales team with higher incentives.

“The average sales salary is ₹40,000 per month. So, close a couple of sales, and you can get not just your salary but also clear your arrears. You can earn many multiples of your CTC through this model,” Byju said.

He announced that Byju’s sales associates will receive 100% incentives for the closed sales directly into their accounts the next working day, while managers will receive 20% of the same from the company.

“The average sales salary is ₹40,000 per month. So, close a couple of sales, and you can get not just your salary but also clear your arrears. You can earn many multiples of your CTC through this model,” Byju said.

He said the company has transitioned from a push-based to a pull-based sales model, which is driven by love for learning rather than the fear of missing out.

Byju has instructed managers to act as coaches, focused on supporting and enabling the sales team rather than enforcing strict call quotas.

“Associates will have the flexibility to work on their own terms, with no tracking of the number of hours spent on calls,” a company source said.

Byju’s has asked employees to report any ill treatment, forced sales or rude behaviour of managers directly to him.

A query sent to Byju’s seeking a comment on the development did not elicit any reply.

A Byju’s logo is seen in this illustration taken, June 22, 2023.
| Photo Credit: Reuters

Byju Raveendran, the founder of the edtech company Think and Learn, which owns the Byju’s brand, will handle the firm’s day-to-day operations following the resignation of CEO Arjun Mohan, the company said on April 15.

The company has also announced a major rejig of the business that will consolidate its business into three focused divisions – the learning App, online classes and tuition centres, and test-prep.

“The changes follow an extensive seven-month operational review and cost optimisation exercise led by outgoing BYJU’S India CEO Arjun Mohan. This new phase will also see Byju Raveendran taking a more hands-on approach in spearheading the daily operations of the company,” the company said.

Mr. Mohan will now transition to an external advisory role, lending his expertise to the company during this transformation phase.

Over the past four years, Mr. Raveendran focused primarily on strategic aspects such as raising capital and driving global expansion.

“With this new organisational structure and with the return of Byju Raveendran as the operational leader, BYJU’S is now well-positioned to begin its next chapter of innovation-led growth by launching at scale its new suite of AI-first products that have already received an overwhelmingly positive feedback in the pilot phase,” the statement said.

New Delhi:

Byju Raveendran’s net worth a year ago was Rs 17,545 crore ($2.1 billion) and he featured in several prestigious ‘globe’s richest’ lists. However, according to the recently released Forbes Billionaire Index 2024, Mr Raveendran’s net worth has fallen to zero.

This sharp decline comes in the wake of multiple crises that have rocked the once high-flying startup, marking a significant fall from grace for the poster child of India’s startup ecosystem.

Noting Byju’s fall from the list, Forbes said, “Only four people from last year’s list dropped off this time, including former edtech star Byju Raveendran, whose firm Byju’s was enveloped in multiple crises and its valuation was marked down by BlackRock to $1 billion, a fraction of its peak $22 billion valuation in 2022.”

Founded in 2011, Byju’s rapidly ascended to become India’s most valuable startup, boasting a peak valuation of $22 billion in 2022. Raveendran’s brainchild revolutionised the education sector with its innovative learning app, catering to students from primary school to MBA aspirants. However, recent financial disclosures and mounting controversies have dealt a severe blow to the company’s fortunes.

The company’s woes were laid bare when Byju’s posted its long-delayed results for the fiscal year ending March 2022, revealing a staggering net loss exceeding $1 billion. This dismal financial performance led to BlackRock, a major investor, slashing its valuation of Byju’s to a mere $1 billion, marking a precipitous decline from its peak valuation.

Byju Raveendran has faced intense criticism for the company’s declining fortunes. The company’s shareholders, including Prosus NV and Peak XV Partners, last month voted to oust Mr Raveendran as CEO, escalating a battle over the fate of the once high-flying online tutoring startup that is fighting to remain in business.

Byju’s foreign investment has also come under the scanner of the Enforcement Directorate. Before the lookout circular against its founder, the ED issued showcause notices to Byju’s parent firm Think & Learn over alleged violations worth over Rs 9,362 crore under the Foreign Exchange Management Act.

New Delhi:

Edtech firm Byju’s has asked its14,000 employees to work from home as it vacated all its offices except the headquarters in Bengaluru amid the ongoing crisis. 

Sources told the NDTV Profit that except for IBC Knowledge Park in Bengaluru – where over 1,000 employees work – all other office premises across the country have been vacated by the edtech giant.

The process has been going on for the past few months as the company did not renew several of its contracts for offices across cities as a way to cut costs, the NDTV Profit reported.

However, around 300 of Byju’s tuition centres, which are physical spaces where students of classes 6-10 study, will continue functioning, the report said.

Byju’s has been struggling with cash-flow problems and is embroiled in a dispute with creditors over a $1.2 billion loan. Once valued at more than $20 billion, Byju’s has seen its valuation crash by an estimated 90 percent over the past year.

Byju’s major stakeholders last month voted to remove Byju Raveendran from his role as chief executive officer (CEO) and stripping him of his

The move was rejected by Byju’s, which said the resolution was passed at a meeting attended only by a “small cohort of select shareholders”. “Byju’s firmly declares that the resolutions passed during the recently concluded extraordinary general meeting… are invalid and ineffective,” the company said in a statement.

Byju Raveendran has lost the support of key investors after a series of crises, including the resignation of auditor Deloitte over corporate governance issues and the legal fight with the US lenders. Mr Raveendran last month had written to the staff, saying that the firm was unable to process the February salaries as its funding remained blocked by the investors.

New Delhi:

Edtech firm Byju’s parent company, Think & Learn Pvt, has found itself embroiled in a complex web of financial mismanagement, offshore dealings, and legal disputes. At the centre of it is $533 million, a Florida hedge fund, a bankrupt shell company and Byju’s beleaguered founder, Byju Raveendran. 

Byju’s major stakeholders last month voted to remove Mr Raveendran from his role as chief executive officer and stripping him of his position on the board of the company he established back in 2015. Byju’s, once hailed as one of India’s most profitable start-ups with a valuation exceeding $20 billion, has witnessed a staggering decline of approximately 90 per cent in the past year.

The Florida Link

The story begins with a small Florida hedge fund, Camshaft Capital Fund, accused of assisting Think & Learn in concealing $533 million. This staggering amount, crucial to the ongoing financial tussle, was initially held by Byju’s Alpha Inc., a bankrupt shell company affiliated with Think & Learn. Lenders, owed $1.2 billion, took control of Byju’s Alpha after it defaulted on its loan. The $533 million, allegedly transferred to Camshaft Capital Fund, was subsequently moved to an undisclosed offshore trust by Raveendran’s brother, Riju Ravindran.

Last month, Alpha had filed for bankruptcy protection over the $1.2 billion loan default.

The lenders, seeking repayment of the $1.2 billion and the elusive $533 million, have been locked in a legal struggle with Byju’s. A court ruling in the US state of Delaware gave lenders control of Alpha, a decision now under appeal by Riju Ravindran. A US court on Friday dismissed Camshaft Capital Fund’s attempt to avoid disclosing details about the cash. 

Byju’s lawyer, Benjamin Finestone, revealed during the hearing that the $533 million was initially transferred to Camshaft Capital Fund before being moved to an unnamed offshore trust. 

Potential Sanctions

Camshaft Capital Fund has resisted disclosing information about the money, citing its “duty” to protect clients and redirecting inquiries to a Delaware company called Inspilearn, a Delaware company that allegedly received the money from Camshaft before its transfer to the unnamed trust.

However, a US judge labelled Camshaft’s reluctance as a “huge red flag.” Failure to comply with the court’s order could lead to sanctions, as the judge threatened a “show cause” hearing on Monday if the information is not provided.

Series Of Setbacks

Byju’s, once valued at $22 billion in 2022, has faced a tumultuous period since early 2023. Auditor resignations, lenders initiating bankruptcy proceedings, and a US lawsuit challenging loan terms have contributed to the company’s downfall.

Byju’s is also grappling with financial challenges that extend beyond courtrooms. Mr Raveendran informed employees recently that the company is unable to process salaries due to a legal dispute with investors, reported news agency Reuters. 

Byju’s started its venture in 2006 by offering classes for MBA aspirants preparing for the CAT exam. Over the years, the edtech firm diversified its offerings, extending its reach from postgraduate to undergraduate and eventually school students. In 2015, it launched Byju’s learning app, setting the stage for the company to become India’s first ed-tech unicorn in just four years.

Byju’s logo.
| Photo Credit: REUTERS

Byju’s founder Byju Raveendran on March 2 said the edtech company will not be able to pay salaries to employees as the recent funds raised through a rights issue are inaccessible due to a legal dispute with certain investors.

In a letter to staff, Mr. Raveendran said the rights issue, launched a month ago, has been successfully closed.

“This was supposed to be a happy correspondence. After all, we now have funds to meet our short-term needs and clear our liabilities. However, I regret to inform you that we will still be unable to process your salaries,” he said.

In the letter — seen by PTI — Mr. Raveendran said the company is still striving to ensure that salaries are paid by March 10.

“We shall make these payments the moment we are permitted to do so as per law,” he added.

Further, Mr. Raveendran said that last month, the company faced challenges due to a lack of capital, and “now we are experiencing a delay despite having funds”.

“Unfortunately, a select few (4 out of our 150 plus investors) have stooped to a heartless level, ensuring that we are unable to utilise the funds raised to pay your hard-earned salaries,” Mr. Raveendran said.

“At their behest, the amount raised through the rights issue is currently locked in a separate account,” he added.

Mr. Raveendran accused these select investors of having a callous disregard for the lives and livelihoods of others even though they had reaped substantial profits from investment in Byju’s.

“It is an agonising reality that some of these investors have already reaped substantial profits — in fact, one of them has made a staggering eight times their initial investment in BYJU’S. And yet, their actions convey a callous disregard for our lives and livelihoods,” he said in the letter.

Mr. Raveendran noted that he has fought fearlessly and tirelessly, “leaving no stone unturned” to find a way to honour the company’s commitment to employees.

“Countless hours have been spent exploring every possible avenue, engaging our legal teams, and advocating for your rights. However, despite our best efforts, we are left with no option but to confront the heart-wrenching reality that we are temporarily unable to provide you with the financial support you deserve,” he said.

Earlier this week, a company law court had asked the embattled edtech firm to consider extending the closing date of the $200 million rights issue, a request that the management had hinted it would not accept even as estranged investors flagged technicalities that prevented the closure of the issue on Wednesday.

In an interim order dated February 27, the National Company Law Tribunal (NCLT), Bengaluru Bench said the funds received by the company in respect to the rights issue should be kept in a separate escrow account, and it should not be withdrawn till the disposal of the matter.

The next hearing has been listed for April 4.

The select group of investors in Byju’s alleged that the edtech giant siphoned off $533 million in an obscure hedge fund in the U.S. and had sought a stay on a $200 million rights issue, calling it illegal and contrary to law.

In a high-voltage corporate drama that unfolded last month, Byju’s shareholders (prominent investors) voted unanimously for removing Founder-CEO Raveendran and his family from the board over alleged “mismanagement and failures” at what was once India’s hottest tech startup but the company hit back calling the voting done in the absence of founders as invalid and ineffective.

Sources close to the investors had earlier said more than 60% of the shareholders voted in favour of all the seven resolutions at the EGM, which included removing the current management, reconfiguration of the board and a third-party forensic investigation into acquisitions done by the company.

The once-storied edtech startup, Byju’s rose to dizzying heights before it faced a series of setbacks.

While the return of students to physical classes post-pandemic and the recent acquisition of Aakash put Byju’s under a financial strain, the edtech firm in the last one year suffered other issues, including its auditor resigning, lenders beginning bankruptcy proceedings against a holding company, and a US lawsuit disputing the terms and repayment of a loan.

New Delhi:

Crisis-hit edtech star Byju’s has contested Friday’s decision of its shareholders to oust its founder as the chief executive officer. The company said the resolutions taken at the shareholders’ meeting were “invalid” since its founders were not present.

“The resolutions passed during the recently concluded extraordinary general meeting – attended by a small cohort of select shareholders – are invalid and ineffective,” Byju’s said.

The company said at least one founder-director must attend the meeting to form a valid quorum, but it was not met since neither Byju Raveendran, his wife nor his brother were present. This renders the resolutions taken at the meeting as “null and void,” said a statement.

Prosus NV and Peak XV Partners were among the shareholders who voted yesterday to dethrone Byju Raveendran, indicating displeasure with the entrepreneur as his company fights to remain in business.

The outcome, however, will not be applicable until March 13 when the Karnataka High Court hears Mr Raveendran’s challenge to the validity of the meeting. The shareholders too are expected to present their decisions before the court to justify their position.

Several staff tried to crash the meeting on a Zoom call involving the investors and the management, reported Bloomberg citing people with knowledge about the matter. There were loud noises and whistles by unknown participants during the meeting, it said.

Byju’s was once a high-flying online tutoring startup valued at $22 billion in 2022. Its valuation has nosedived 90% since and the company has cut thousands of jobs to survive.

In a series of setbacks, the company recently saw its auditor Deloitte resigning and a lawsuit in the US disputing loan payment terms. It also faces an Enforcement Directorate probe in connection with alleged Foreign Exchange Management Act (FEMA) violations.

Majority of Byju’s shareholders on Friday voted unanimously for removing founder CEO Byju Raveendran and his family from the board over alleged “mismanagement and failures” at what was once India’s hottest tech startup, but the company dug in its heels, calling the voting done in absence of founders as invalid and ineffective.

Founder CEO Raveendran Byju, his wife and brother – the only three members on company board as of now – stayed away from the extraordinary general meeting (EGM) called by a group of six investors, who collectively hold more than 32% in Think & Learn (T&L), the firm that operates online tuition platform Byju’s.

At the end, more than 60% of the shareholders voted in favour of all the seven resolutions, which included removing the current management, reconfiguration of the board and a third party forensic investigation into acquisitions done by the company.

Prosus – one of the six investors who had called the EGM – in a statement said “shareholders unanimously passed all resolutions put forward for vote.

“These included a request for the resolution of the outstanding governance, financial mismanagement and compliance issues at Byju’s; the reconstitution of the board of directors, so that it is no longer controlled by the founder of T&L; and a change of leadership of the company.” Sources with direct knowledge of the matter said the EGM was to start at 0930 hours on Friday but was delayed for almost an hour as around 200 people, some of them Byju’s employees, sought to join the virtual meet.

Only after due verification the investors were let in, they said, adding some 40 people representing the investors were allowed in and voted on the resolution moved by some investors.

However, the outcome of the vote at the EGM will not be applicable until March 13, when the Karnataka High Court will next hear Raveendran’s plea challenging the move by certain investors to call the meeting.

The High Court on Wednesday had refused to stay the EGM but stated that any resolution passed shall not be given effect till the next date of hearing. Raveendran and family own 26.3% in the company.

Byju’s in a statement, issued before the EGM results were declared, said it “firmly declares that the resolutions passed during the recently concluded EGM – attended by a small cohort of select shareholders – are invalid and ineffective. The passing of the unenforceable resolutions challenges the rule of law at worst.” Ahead of the EGM, four out of the six investors, on Thursday evening filed an oppression and mismanagement suit against the management of the company in the Bengaluru bench of the NCLT, seeking declaring of founders, including CEO Byju Raveendran, as unfit to run the company, appointment of a new board, declaring the just-concluded rights issue as void and a forensic audit of accounts.

A Byju’s spokesperson reacting to the news of suit being filed said the company has not received any formal intimation of any such petition. “Indian regulation stipulates due process for conducting an EGM, intimation of petitions being filed in NCLT, etc. But certain shareholders prefer to manufacture a media spectacle as opposed to following due process.” Sources said as per the process, the National Company Law Tribunal (NCLT) will issue notices once the petition gets admitted.

“As shareholders and significant investors, we are confident in our position on the validity of the EGM meeting and its decisive outcome, which we will now present to the Karnataka High Court in line with due process,” Prosus said.

Byju’s in its statement cited the Karnataka High Court order and said “coupled with numerous procedural irregularities and deficiencies, invalidates the resolutions passed by a select, narrow group of shareholders.” “These resolutions were voted upon without the valid constitution of a quorum, as stipulated in BYJU’S Articles of Association (AoA). According to Articles 38 and 39(a) of the AoA, at least one founder-director is required to form a valid quorum.

“As the founders did not participate in the meeting, the quorum was never legitimately established, rendering the resolutions null and void,” it said, adding “only around 20% of the number of shareholders attended this farcical EGM.” Byju’s referred to the number of shareholders and not the shareholding they hold in the company.

“The founders maintain that this purported EGM was designed to provoke a trial by the media and is fundamentally devoid of merit, having been brought forward by a select few shareholders as part of a self-serving agenda against the company and its founders,” it said.

“In any event, these resolutions merely request the Board to “consider” the recommendations passed at the EGM. They do not have any binding effect whatsoever on the company or its decision-making processes. As such, the resolutions lack the necessary authority to impose any obligations on Byju’s or its directors.” Investors have also sought a forensic audit of the company in the plea filed before the NCLT on Thursday evening, according to a court filing. They sought declaring the present management as unfit to run the company and appointing a new CEO and a new board. The plea also wants a forensic audit and a direction to the management to share information with the investors.

Sources said the plea also seeks a declaration of the just-concluded $200 million rights offer as void and sought a direction that the company should not take any corporate actions that will prejudice the rights of the investors.

The petition has been signed by four investors — Prosus, GA, Sofina, and Peak XV — along with support from other shareholders, including Tiger and Owl Ventures.

The edtech firm in the last one year suffered other setbacks, including its auditor resigning, lenders beginning bankruptcy proceedings against a holding company and a U.S. lawsuit disputing the terms and repayment of a loan.

Byju’s was valued at $22 billion in 2022 and it is now valued at $200 million in a rights issue.

A file photo of Byju’s logo
| Photo Credit: Reuters

Edtech major BYJU’S top official said the company’s $200 million rights issue has been fully subscribed and asked all shareholders to participate in the “renewed mission”.

Think and Learn Private Limited, which operates under BYJU’S brand name, has floated $200 million rights issue at less than 99% enterprise valuation compared to its peak valuation of $22 billion.

“Our rights issue is fully subscribed and my gratitude to my shareholders remains strong. But my benchmark of success is the participation of all shareholders in the rights issue. We have built this company together and I want us all to participate in this renewed mission,” BYJU’S Founder and CEO Byju Raveendran said in a letter to shareholders.

Mr. Raveendran said that the company will appoint a third-party agency to monitor the usage of funds raised through the rights issue. “The ownership of the company does not change pre and post a rights issue, so the question of valuation itself is irrelevant as value preservation is maintained,” he said.

The comment assumes significance as a group of shareholders, who jointly hold around 30% stake in BYJU’S, have called for an extraordinary general meeting (EGM) to oust top management alleging several anomalies under their leadership.

“A few vested interests are misrepresenting our relationship as adversarial. Let me be unequivocal in stating that such narratives could not be further from the truth. There is nothing to be gained from conflict, especially with those who share our commitment and conviction towards our common cause,” he said.

He said that he will not allow “self-serving actions of a few individuals” cloud his judgment and pollute the relationship among shareholders.

BYJU’S CEO has offered to restructure the Board and appoint two non-executive directors to the Board by the mutual consent of the founder and shareholders after the audit of financial year 2023 is complete by March-end.