Byjus faces a fraudulent-transfer lawsuit in a US bankruptcy court related to those funds.
(Photo: Reuters)4 min read Last Updated : Oct 09 2024 | 8:28 AM ISTBy Steven Church and Jonathan RandlesA software company controlled by Indian entrepreneur Byju Raveendran drained cash from US affiliates in violation of US bankruptcy rules, according to a lawsuit filed Tuesday in federal court in Delaware.Click here to connect with us on WhatsAppMoney that should be used to repay creditors was instead siphoned off to Whitehat Education Technology, a court-approved trustee for the affiliates said in court papers.
The trustee, bankruptcy attorney Claudia Springer, sued to get back nearly $700,000 that was moved from entities under her control.The dispute is a small piece of a much bigger battle between Raveendrans troubled tech company Byjus and lenders owed more than $1.2 billion.
For more than a year, those lenders have tried to track down $533 million that Byju allegedly hid from them.A representative for Byjus did not respond to an email requesting comment.A Byjus affiliate that once held the missing $533 million was taken over by lenders and put into Chapter 11 bankruptcy, while three other units were forced into insolvency proceedings and placed under Springers control.
All of those US-based entities are in bankruptcy court in Wilmington, Delaware, while Byjus itself faces bankruptcy proceedings in India.When a company comes under court protection in the US, especially in the early days of a case, cash cannot typically be moved or used to pay bills without a bankruptcy judges approval.
Lenders have accused Byjus officials of moving the $533 million in violation of bankruptcy rules.Between Sept.
26 and Oct.
7, the US affiliates Stripe Inc.
account transferred the funds out of the bankrupt companies to a Wells Fargo bank account associated with Whitehat, according to Tuesdays complaint.
Springer alleged individuals residing in India with Byju-related email accounts have been attempting to access the US debtors account, according to images of the firms Stripe account history thats included in the complaint.Springer has sought a court order preventing Wells Fargo from transferring any funds out of Whitehats account.Stripe and Wells Fargo didnt immediately return messages seeking comment.Byjus faces a fraudulent-transfer lawsuit in a US bankruptcy court related to those funds.
That case involves Byjus Alpha, a shell company created by Byjus to tap US capital markets.
After Byjus defaulted, lenders seized control of the shell company, put it under court protection and sued to get the $533 million they claim should go to them.The US bankruptcy case is BYJUs Alpha Inc., 24-10140, US Bankruptcy Court District of Delaware (Wilmington).When a company comes under court protection in the US, especially in the early days of a case, cash cannot typically be moved or used to pay bills without a bankruptcy judges approval.
Lenders have accused Byjus officials of moving the $533 million in violation of bankruptcy rules.Between Sept.
26 and Oct.
7, the US affiliates Stripe Inc.
account transferred the funds out of the bankrupt companies to a Wells Fargo bank account associated with Whitehat, according to Tuesdays complaint.
Springer alleged individuals residing in India with Byju-related email accounts have been attempting to access the US debtors account, according to images of the firms Stripe account history thats included in the complaint.Springer has sought a court order preventing Wells Fargo from transferring any funds out of Whitehats account.Stripe and Wells Fargo didnt immediately return messages seeking comment.Byjus faces a fraudulent-transfer lawsuit in a US bankruptcy court related to those funds.
That case involves Byjus Alpha, a shell company created by Byjus to tap US capital markets.
After Byjus defaulted, lenders seized control of the shell company, put it under court protection and sued to get the $533 million they claim should go to them.The US bankruptcy case is BYJUs Alpha Inc., 24-10140, US Bankruptcy Court District of Delaware (Wilmington).First Published: Oct 09 2024 | 8:28 AMIST