Indian edtech company Byju's, already embroiled in legal and financial difficulties, is now facing fresh allegations of fund transfers in violation of U.S. bankruptcy regulations. According to a lawsuit filed in the Delaware federal court, Byju's is accused of illegally transferring nearly $700,000 from its U.S. affiliates to Whitehat Education Technology, bypassing the authority of a court-appointed trustee, Claudia Springer. This lawsuit comes amidst ongoing efforts by Byju's lenders to recover over $1.2 billion in debt, with $533 million believed to have been concealed by the company.
The dispute centres on a Byju’s affiliate that once held the $533 million, which creditors took over and placed under Chapter 11 bankruptcy. Several U.S.-based affiliates of Byju’s, including those controlled by Springer, are currently involved in bankruptcy proceedings in Wilmington, Delaware. The lawsuit alleges that between late September and early October, funds were moved from a Stripe account linked to the affiliates into a Wells Fargo account associated with Whitehat, all without the necessary court approvals.
Springer, the trustee, has filed a motion to prevent Wells Fargo from allowing further transfers and has highlighted suspicious activity involving Byju’s employees in India attempting to access the U.S. affiliates' accounts. The edtech company is also facing a separate lawsuit regarding the $533 million connected to Byju’s Alpha, a shell company created to access U.S. capital markets.
These legal developments underline the escalating tensions between Byju’s and its creditors as the company battles lawsuits on multiple fronts in both the U.S. and India.
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