Byju’s RP’s suit claims directors owe compensation to company under IBC laws

An EY-backed resolution professional (RP) has filed lawsuits at the National Company Law Tribunal (NCLT) claiming former Byju’s directors owe compensation to the company for fraudulent transfers of the company’s assets, according to people familiar with the matter.

The lawsuits invoke a provision under the Insolvency and Bankruptcy Code which provides legal recourse to reverse transactions undertaken by a company’s previous management.

Shailendra Ajmera, the RP of Think and Learn, which houses Byju’s ed tech business and is undergoing insolvency, has claimed in the lawsuits filed in late April that two separate sets of transactions were detrimental to the company. One of them resulted in a $533 million investment held by a US subsidiary moving to related companies and the other involved a sum of Rs 130 crore moving from Think and Learn to its subsidiary in India, said the people. Think and Learn was, therefore, deprived of these funds, it is claimed.


The lawsuits implicate the company’s three former directors – Byju Raveendran, Riju Ravindran and Divya Gokulnath. Ajmera has demanded that the sums be made good to the company by the former directors.

Riju Ravindran had in early April filed a petition with the NCLT claiming Ajmera should be removed as the RP of Think and Learn because EY has been an adviser to the company prior to its admission into insolvency proceedings, raising the issue of conflict of interest.

Further, he claimed that EY was perpetuating a fraud and acting in the interest of Glas Trust, which claims to be representing the majority of Think and Learns creditors, and not in the interest of the company.

In a recent petition filed with the NCLT, Riju Ravindran claimed that Glas Trust, which is the lenders’ agent that forms 99% of the committee of creditors of Think and Learn, is not legally entitled to represent the lenders. He claimed that Glas Trust didn’t have the support of 50% of the lenders as required in the borrowing agreements entered between Think and Learn and its lenders. He also claimed that it had no authority to instruct Ajmera or undertake any acts towards the company’s insolvency.

One of Ajmera’s two lawsuits follows a recent Delaware court ruling in the US where Byju’s Alpha’s move to transfer a $533 million ownership interest in a set of funds called Camshaft Funds to related entities was under question. Byju’s Alpha is a US subsidiary of Think and Learn. The Delaware court termed the transfers illegal and demanded their reversal. The former directors have appealed the ruling.

Think and Learn's former directors responded to ET's queries sent on Monday post publication of this report terming the allegations of a $533 million fraud as 'baseless'.

"These false claims have been repeated multiple times without any evidence and are clearly part of an orchestrated effort to build a false narrative," the former directors said in a statement.

"The Delaware court orders came in the absence of representation from Think & Learn Pvt Ltd (TLPL), as the Resolution Professional (RP) in collusion with GLAS instructed the company’s lawyers to withdraw from the case. This has seriously harmed the company's ability to defend itself, and its US assets are being sold pennies to the dollar. Riju has now challenged this verdict in the Delaware court."

The former directors also claimed that the loan of $1.2 billion taken by Think and Learns US subsidiary Byju's Alpha was structured in consultation with international banks such as JP Morgan and Morgan Stanley. The structure executed through incorporation of a US arm was 'lawful, transparent and aligned with international standards', they claimed. The RP has alleged that funds worth $533 million were diverted from this loan.

"What is being conveniently ignored is the fact that Mr. Riju Ravindran has injected thousands of crores of his personal funds into TLPL even after bankruptcy applications began—solely to ensure employee salaries were paid. These transactions are fully documented and supported by banking records. Mr. Byju Raveendran and Ms. Divya Gokulnath had also committed their personal savings towards keeping the company afloat during the most difficult period."

The former directors also claimed that Think and Learns Indian subsidairy, Byju's K3 Education Private Limited, to which a sum of Rs 130 crore was allegedly diverted had loaned money to its parent company.

"It (K3) had earlier loaned thousands of crores to TLPL to cover operational expenses, including staff salaries. In fact, TLPL still owes over Rs 1,600 crores to K3. Therefore, the claim of “diversion” is both factually incorrect and misleading".