The steering committee of lenders of the $1.2-billion term loan to Byju’s said that the US Bankruptcy Court for the District of Delaware has ordered the arrest of hedge fund manager William Cameron Morton for allegedly helping the Indian ed-tech startup conceal $533 million from its creditors.
In its ruling, the court also granted a preliminary injunction in favour of Byju’s Alpha Inc against Riju Ravindran, Inspilearn LLC, and Camshaft Capital Fund LP and its affiliates.
The ruling comes after a protracted legal battle in which the court also found that Byju Raveendran and Divya Gokulnath were working in concert with the defendants and ordered them to comply with its ruling. Pursuant to the Order, Byju, Divya, and the defendants are prohibited from further transferring or using any of the $533 million in loan proceeds previously held by Camshaft Capital Fund LP and subsequently transferred to an unnamed, unknown offshore trust, the committee of lenders said in a statement.
“This amount, rightfully owed to lenders, was found to have been transferred to an unnamed offshore trust by defendants, including Byju Raveendran and Divya Gokulnath, who were deemed working in concert with the accused parties,” the statement said.
According to court documents filed by Byju's Alpha, a subsidiary controlled by Byju's lenders, the start-up defaulted on $1.2 billion in debt, prompting the US bankruptcy filing in February. During efforts to recoup losses, the lenders unearthed sizable transfers to Morton's hedge fund, Camshaft Capital, raising eyebrows over the nature of these transactions. Morton, who allegedly fled the US ahead of the hearing, faces a daily fine until he adheres to the court's directives. The background of the case involves a complex web of transactions involving Byju's Alpha, Camshaft Capital Fund LP, and Inspilearn LLC, which were red-flagged by lenders.
“This ruling confirms that Byju Raveendran himself is acting in concert with, among others, his brother, Riju, his wife, Divya, and fugitive William Morton, and that these individuals are continuing to intentionally defraud BYJU’s lenders. The Court-ordered freezing of assets is an important step towards recovering the missing $533 million, and we will take all necessary legal actions to recover what we are rightfully owed," the lenders said.
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