Byju Raveendran Chess Move Gets Caught, Accused Of Manipulation To Regain Hold On The Firm With $533 Million Hidden Cash

Byju Raveendran’s journey, once considered as the classic rags-to-riches fairy tale, has now turned into a tale of riches -to-rags-. Once lauded as India’s premier ed-tech innovator the focus has now shifted to allegations of financial mismanagement, secret dealings, and a battle to regain control of what was once a shining empire.

Adding on to the chapters of the Byju book, a court filing reveals that Byju Raveendran allegedly attempted to use hidden loan proceeds to secretly buy back Epic!, a US-based education software company that had been taken over by an American trustee. The plan? Regain control of the shipwrecked Byju’s empire. The result? A chess move that didn’t quite make it past checkmate.

The Pawn in the Game

Entering into the story is William R. Hailer, a Nebraska businessman and former political consultant, who has accused Raveendran of using him as a “pawn” in a bid to outmaneuver US creditors owed a staggering $1.2 billion.

According to Hailer’s testimony filed in the US Bankruptcy Court in Delaware, Raveendran recruited him to negotiate with lenders. The goal was to leverage the heavily discounted debt (trading at just $0.24 on the dollar) to wrest back ownership of Epic!

To sweeten the deal, Raveendran allegedly wired $11.25 million to Hailer’s company, Rose Lake Inc., to create the illusion of financial strength. The plan was for Hailer to demonstrate his financial readiness to lenders and later return the money to Raveendran.
But the move didnot panout as anticipated. “Over the last several months, I have been used as a pawn in Byju’s manipulation of the law,” Hailer stated, painting a picture of secretive dealings and questionable financial maneuvers and dealings.

The Mystery of the Missing Millions

At the center of the storm is OCI Ltd., a UK-based logistics firm that reportedly received hundreds of millions in loan proceeds now claimed by US lenders. Hailer’s testimony suggests OCI was a key cog in Raveendran’s strategy. While Byju’s founder has asserted that the funds are spent, creditors and courts are skeptical, suspecting hidden cash reserves to the tune of $533 million.

Hailer’s attempts to verify OCI’s financial standing yielded no results. Instead, he described regular communication with Raveendran and Indian associates, culminating in a visit to Raveendran’s Dubai family compound. There, he met investors allegedly backing Raveendran’s attempts to regain control of Byju’s.

Legal Battles on Two Fronts

Byju’s troubles span continents, with simultaneous legal battles in India and the US. In the US, lenders are fighting to recover their dues through state and federal courts, while in India, the ed-tech giant faces insolvency proceedings. A court-appointed professional is now tasked with untangling the financial mess and raising funds to repay lenders.

Raveendran, for his part, has denied any wrongdoing, portraying himself as a victim of aggressive creditors specializing in distressed assets but as allegations mount and legal proceedings intensify, the story of Byju’s appears to be shifting from innovation to to that of pure greed.

Byju’s Lenders Challenge Aakash EGM Amidst Insolvency Tangle

Byju’s financial woes took another turn as Glas Trust, representing US lenders owed $1.2 billion, opposed an extraordinary general meeting (EGM) called by Aakash Institute, a subsidiary of Byju’s parent entity Think & Learn. Scheduled for Wednesday, the EGM has raised concerns about its potential impact on Byju’s insolvency proceedings, sparking debates in the National Company Law Tribunal (NCLT).

Central to the lenders’ objections is the continued involvement of Byju Raveendran, the founder of Byju’s, on the board of Aakash despite the appointment of a resolution professional (RP) to oversee Think & Learn. Glas Trust’s counsel questioned how Raveendran could legally represent the corporate debtor (Think & Learn) on Aakash’s board under the current insolvency framework.

“The RP seems indifferent while assets are being frittered away,” Glas Trust argued. The trust also pressed the RP for clarification on whether Raveendran was allowed to stay on the board or if a new representative had been appointed. They further alleged that the board, under unclear circumstances, passed a resolution to convene the November 20 meeting.

Minority Shareholders Cry Foul

Adding to the turmoil, minority shareholders of Aakash Institute, including global investment firm Blackstone, have filed a mismanagement and oppression petition against the current management.

Their primary grievance? A proposal in the EGM seeks to amend governance terms to strip minority shareholders of their rights while granting special privileges to the majority stakeholder, Ranjan Pai’s Manipal Education and Medical Group, which holds a 40% stake in Aakash.
“This is a blatant act of oppression,” said the counsel for the minority shareholders, signaling a deepening rift within Aakash’s ownership structure.

The BCCI Angle and Withdrawal Petition

In a separate but related development, the RP’s counsel urged the tribunal to prioritize the withdrawal of an insolvency petition filed by the Board of Control for Cricket in India (BCCI) against Byju’s.

The BCCI filed the petition over a Rs 158 crore payment dispute, but a Supreme Court ruling on October 23 quashed an earlier appellate tribunal order that allowed the settlement. The RP argued that since the settlement was finalized before the Committee of Creditors (CoC) was constituted, the NCLT should take precedence in resolving the matter.

“The Supreme Court has clarified that the NCLT, not the CoC, is the decision-making body for withdrawal under the new framework,” the RP’s counsel explained, urging the bench to expedite the process.

The Murky Picture

As Byju’s faces these legal complexities, the growing dissent among stakeholders is deepening the challenges faced by the ed-tech giant. From lender disputes to shareholder grievances and mounting legal proceedings, Byju’s insolvency proceedings are proving to be as complex as its meteoric rise.

Byju’s meteoric rise once symbolized the limitless potential of India’s startup ecosystem. Now, its struggles instead bring to the fore the darker side of rapid expansion, questionable financing, and regulatory scrutiny. As the courts unravel the financial web, the legacy of Byju’s hangs in the balance.

Raveendran’s chess move may have failed, but this game (or better word still, gamble) is far from over. Who will checkmate whom in the battle for Byju’s future?