American court orders Byju's to freeze $533 million in major relief for lenders

Think & Learn, which operates Byju's, has been directed to freeze $533 million to protect the money for "disgruntled lenders who claim the cash should only be used to pay them", a US judge has ruled. 

The decision is being seen as a mixed victory for lenders engaged in a bitter battle with the firm over the money. The $533 million was allegedly transferred to Morton’s hedge fund and then moved to an unnamed, off-shore trust. 

According to a Bloomberg report, the lenders had earlier demanded the money be placed under the control of the federal court to prevent the cash from being spent by the tech firm.

The order was aimed at Riju Ravindran, one of the company’s directors and the brother of founder Byju Raveendran. 

Ravindran was also ordered to help solve one of the central mysteries of the court dispute: where the money is located. “I do not believe him when he says he cannot” learn the location from Think & Learn, the judge said.

Ravindran’s attorney, Sheron Korpus argued that the lenders are at fault for any financial woes suffered by Think & Learn. The company was justified in keeping the money away from the lenders because they have been overly aggressive in claiming the debt was in default, Korpus told Dorsey. Think & Learn is fighting the lenders in state courts in Delaware and New York. 

Lenders had previously seized control of a holding company set up by Think & Learn to issue $1.2 billion in debt. That unit, Byju’s Alpha, is now in bankruptcy under court's oversight. Ravindran is appealing a decision by Delaware’s Chancery Court approving that seizure.

At the start of the Thursday bankruptcy hearing in Wilmington, Delaware, the US judge ordered the arrest of the founder of a small Florida hedge fund for refusing to reveal where Think & Learn allegedly hid the cash. If he can be located by US Marshals, William C. Morton will be locked up for contempt of court under Dorsey’s order. Morton must also pay $10,000 a day until he provides details about the money, which was briefly placed with the hedge fund Camshaft Capital Fund.

Ravindran also testified Thursday that three of Think & Learn’s six directors have resigned, leaving only himself, his brother and his sister-in-law in charge of the company.