Byju Raveendran, the embattled founder of Indian ed-tech company Byju’s, has sharply criticised a U.S. bankruptcy court order directing him to pay more than USD 1.07 billion, calling the ruling erroneous and vowing a strong legal challenge. The order, issued by a Delaware bankruptcy court on 20 November, marks the most dramatic setback yet for the entrepreneur who once helmed India’s most valuable startup.

The court found Raveendran in default after he allegedly ignored multiple directives and failed to provide satisfactory information about USD 533 million that Byju’s U.S. subsidiary Alpha had transferred in 2022 and supposedly never recovered. The judge also raised questions regarding a limited-partnership stake later valued at USD 540.6 million.

The ruling stems from legal action by lenders attempting to claw back funds tied to a USD 1.2 billion term loan extended to the ed-tech unicorn in 2021.

Lenders accuse missing funds; founders deny wrongdoing

The dispute escalated in April when a group of U.S. lenders led by GLAS Trust sued Raveendran and his wife, co-founder Divya Gokulnath, over the missing USD 533 million. The couple denied any wrongdoing, alleging that lenders were attempting a hostile takeover of the company amid its worsening financial stress.

Raveendran and Gokulnath also announced their intent to pursue a USD 2.5 billion countersuit against GLAS Trust and other parties in India and elsewhere, though no such filing has been publicly reported. Byju’s separately challenged the loan acceleration in the New York Supreme Court.

The Delaware court, however, noted what it characterised as a months-long pattern of noncompliance from Raveendran. According to court records, he skipped hearings, missed extended deadlines, and ignored a prior contempt order that imposed USD 10,000 per day in sanctions — penalties that remain unpaid.

Judge calls case “unique”; Raveendran claims judgment flawed

U.S. Bankruptcy Judge Brendan Shannon said the circumstances were “unique and unlike anything” he had previously encountered. He described the relief granted as “extraordinary” but justified, given the alleged noncompliance.

Raveendran’s legal team disagreed, calling the judgment fundamentally flawed. J. Michael McNutt, senior litigation advisor at Lazareff Le Bars, representing Raveendran, said the court had “ignored relevant facts” and that an appeal would be filed shortly.

Counsel for Raveendran argued that the court relied heavily on an earlier contempt order without giving him a full opportunity to present his defence. They further claimed GLAS Trust had prior knowledge that the Alpha loan proceeds were used for Think & Learn — Byju’s parent entity — and not for personal gain by the founders.

The judge has given parties seven days to respond to the ruling.

Fresh filing alleges round-tripping; Raveendran denies

Earlier this week, a fresh filing in the bankruptcy case alleged that most of the missing USD 533 million had been “round-tripped back to Byju Raveendran and associates.” Raveendran has categorically denied the claim, insisting that no funds were diverted for personal benefit and that all transfers supported the company’s operations.

He has repeatedly challenged the Delaware court’s jurisdiction. However, in an earlier order, the court held that his activities in U.S. fundraising and his role in associated entities granted it jurisdiction.

India process underway as Byju’s faces collapse

Meanwhile, in India, Byju’s is undergoing a court-supervised sale after insolvency proceedings began last year. Early bidders include Manipal Education and Medical Group (MEMG) and entrepreneur Ronnie Screwvala.

The developments highlight a spectacular fall for a startup once valued at USD 22 billion, backed by marquee global investors such as Tiger Global, Prosus, and the Chan Zuckerberg Initiative. Byju’s now grapples with lawsuits across multiple jurisdictions, a severe cash crunch, mass layoffs, unpaid salaries, and an intense battle for control as creditors seek to recover dues.

Raveendran’s camp maintains that lenders have attempted to weaponise litigation to force a restructuring on their terms. Lenders, meanwhile, argue that the founders repeatedly obstructed oversight and failed to secure the company’s financial stability.

As the legal battles span India, the U.S., and potentially other jurisdictions, the immediate focus remains on whether Raveendran will succeed in overturning the Delaware ruling — a decision that could shape the future of India’s most turbulent startup collapse.