The founder of bankrupt Indian tech firm Byju’s tried to use loan proceeds that he allegedly hid from US lenders to secretly buy back a software company that was taken over by an American trustee, according to a new court filing.
Byju Raveendran has been trying to regain control 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 Nebraska businessman William R. Hailer.
Raveendran allegedly recruited Hailer, who is a former political consultant, to try to buy out US creditors owed more than $1.2 billion under a loan, according to the filing with the US Bankruptcy Court in Delaware. Raveendran could then swap that debt, which was trading at about 0.24 cents on the dollar as of Wednesday evening, for ownership of Epic!, a education-software firm. The plan ultimately failed.
“Over the last several months I have been used as a pawn in Byju’s manipulation of the law,” Hailer wrote in his testimony. Hailer is set to testify in federal court on Thursday on behalf of a trustee, which is planning to sell Epic! in order to raise money for Byju’s creditors, including US lenders.
A representative of Byju’s and a lawyer for Raveendran did not return requests for comment.
Raveendran has denied wrongdoing in past responses to lender allegations, saying his actions were a justified response to overly aggressive tactics used by creditors who specialize in squeezing money out of distressed companies.
This summer, when Hailer began negotiating with lenders, Raveendran wired $11.25 million to a company that Hailer ran called Rose Lake Inc. Hailer was supposed to use the cash to prove to lenders that he was well funded. The money was then to be returned to Raveendran, Hailer said.
The money came from OCI Ltd., a UK-incorporated logistics firm that received hundreds of millions of dollars in loan proceeds that US lenders have been trying to reclaim, according Hailer’s court filing.
Hailer said he tried unsuccessfully to gather proof that OCI was still holding money on behalf of Byju’s, even though Raveendran has claimed all the cash has been spent. For several months, Hailer said he regularly spoke with Raveendran and other Indian business people involved in the Byju’s empire. Hailer also visited Raveendran’s family compound in Dubai for talks with investors who were allegedly backing Raveendran’s effort to regain control of Byju’s.
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. In India, Byju’s is facing an insolvency proceeding, where a court-appointed professional has been tasked with raising money to repay lenders.
The article originally appeared on NDTV.
