The chief content officer of troubled Indian tech firm Byju’s and an ally of the company’s founder face financial sanctions in the US for their roles in stripping software, cash and other assets from businesses under court supervision.
A federal judge is considering imposing millions of dollars in sanctions on Byju’s manager Vinay Ravindra and company ally Rajendran Vellapalath, who founded Dubai-based tech startup Voizzit Technology.
At a court hearing Tuesday, US Bankruptcy Judge John T. Dorsey said he will issue an “order to show cause” that would force the two tech executives to justify their actions, or be declared in contempt of court and be required to pay financial penalties.
Lenders owed more than $1.2 billion are fighting to liquidate US education software companies that Byju’s purchased a few years ago for $820 million. Byju’s, founded by controversial entrepreneur Byju Raveendran and his family, is in bankruptcy in India after defaulting on the debt it owes US lenders.
Last month, a Nebraska businessman testified that he spent months helping Raveendran try to regain control of Byju’s US software companies, which are being run by a court-supervised trustee. The effort failed and the businessman, William Hailer, ultimately broke with Raveendran and accused the entrepreneur of unethical business tactics.
Lenders want the US judge to punish Ravindra, Vellapalath and his firm Voizzit for taking over the cloud-based accounts of the US companies — Epic! Creations and Tangible Play — and draining them of more than $1 million in cash plus valuable internet platforms used by students and other assets.
Ravindra and a representative for Byju’s did not return an email seeking comment.
Vellapalath appeared in court Tuesday by video from Dubai and argued that Voizzit’s actions were legitimate because Voizzit actually owns Epic! and Tangible Play, not Byju’s. Voizzit loaned Byju’s more than $100 million in 2023 and therefore had the right to take ownership of the units, according to Vellapalath.
Dorsey rejected that argument during the hearing, saying he did not “find Mr. Vellapalath to be credible.”
Raveendran has been trying to regain control of his capsizing education technology empire, which is under court supervision in both India, where the parent is based, and the US, where some of its valuable units are located, according to a court declaration filed by Hailer.
In past responses to lender allegations, Raveendran has denied any wrongdoing, saying his actions were a justified response to overly aggressive tactics used by creditors who specialize in squeezing money out of distressed companies.
Lenders have been fighting Byju’s in both US state and federal courts for more than a year. Lenders claim Raveendran hid $533 million in loan proceeds that should have been repaid to creditors. Byju’s is also facing an insolvency proceeding in India, where a court-appointed professional has been tasked with raising money to repay lenders.
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