An American court on Thursday, February 27, found Riju Ravindran, brother of Byjus founder and CEO Byju Raveendran, the holding company of Byjus, and an American hedge fund guilty of “fraudulent transfer” of $533 million and a “breach of fiduciary duty.” The $533 million had gone missing from a $1.2 billion loan that the edtech company had defaulted on in the US.
The Delaware Bankruptcy Court issued a summary judgement against Riju Raveendran, Think & Learn (the holding company of Byju’s), and the hedge fund Camshaft Capital, finding them guilty of “fraudulent transfer” of $533 million and a “breach of fiduciary duty.” A summary judgement is granted when “there is no genuine dispute as to any material fact” in the case.
Alpha Inc was a special purpose financial institution solely created to borrow a $1.2 billion five-year term loan from Glas Trust, a consortium of lenders, in November 2021. Alpha defaulted on the loan in March 2022 and was put under trusteeship in March 2023. In February 2024, Glas Trust filed a case accusing Riju Raveendran, Think & Learn, and Camshaft of fraud.
Riju Raveendran, one of the co-founders of Think and Learn Pvt. Ltd, the holding company of Byju’s, was the sole director of Alpha from September 2021 to March 2023, when he was removed.
The judgement notes that within weeks of defaulting on the loan, Alpha began moving its assets around. Between April and July 2022, Alpha wired $533 million to Camshaft Capital Fund, a ‘small hedge fund’, in a series of transactions. In exchange, Alpha got a limited partnership interest in Camshaft.
In turn, Camshaft loaned the $533 million to OCI Limited, a London-based ‘commercial process outsourcing’ company, in exchange for promissory notes.
The judgement says that it was Alpha, not Camshaft, that “bore the sole risk of any default by OCI under those promissory notes.” Riju Ravindran signed off on side letters for each promissory note on behalf of Alpha. It essentially meant that if OCI failed to pay against the promissory notes, the losses would be taken from the limited partnership agreement between Alpha and Camshaft, essentially the Alpha Funds.
All this was done without Glas Trust’s approval or knowledge at the time. In an earlier piece, the authors had elaborated on the OCI and Camshaft transactions.
“T&L (on whose board Riju Ravindran sat) actively misled the lenders into believing that the funds remained in the debtor’s (Alpha) bank accounts in cash or cash equivalents,” the judge noted.
On March 3, 2023, Glas Trust took over Alpha and appointed a restructuring professional as its director. Despite this, Ravindran transferred the limited partnership interest with Camshaft to Inspilearn, another Byju entity, without any consideration. The USD 540 million transaction was signed off by Ravindran, with T&L making the “ultimate decision” and “Ravindran merely signing documents without asking questions.” This transfer was finalised on March 31, 2023, and Alpha was left with USD 439,905 in its accounts.
Ravindran had told the court that the funds were transferred since “BYJU’s felt the need to protect the cash.” On May 8, 2023, when asked about the funds, Byju Raveendran told a senior advisor from Glas Trust that Alpha “doesn’t have the money” and that “the money is someplace the lenders will never find it.”
On February 1, 2024, Alpha filed for bankruptcy. The same day, Camshaft and Riju Ravindran transferred USD 540,647,109 from Inspilearn to a “non-US trust” under Inspilearn. Over a month later, on March 5, Ravindran submitted to the court that he had resigned as manager of Inspilearn on February 14 and that the Alpha funds had again been transferred to a "non-US-based subsidiary of BYJU’s.”
The non-US T&L subsidiary has not yet been identified, and on May 28, 2024, Ravindran was held in contempt of court for refusing to comply with an injunction that asked for the location and size of the Alpha funds. Ravindran has argued in court that sanctions imposed by the contempt order against him have made the process of discovery of the Alpha funds a pointless exercise. “Simply put, Ravindran’s argument makes no sense,” the judge noted in the document.
The court noted that the transfers were “concealed” for nearly 16 months and that Alpha transferred nearly 80% of its assets to Camshaft. “The debtor’s former management actively concealed the Camshaft fund transfer, disclosing post-transfer that the debtor still possessed over USD 500 million in ‘Cash and Bank’,” the summary judgement said.
On its part, Camshaft “concealed the location of the Alpha funds in several ways, including by disregarding this Court’s discovery orders, even in the face of contempt sanctions and a warrant for civil confinement.” Alpha was left “insolvent” following the Camshaft transactions, “with no ability to generate revenue.”