Indian edtech major BYJU's US arm Alpha Inc. is facing a lawsuit from an agent acting on behalf of lenders who are owed $1.2 billion for hiding $500 million from creditors. The lawsuit has been filed by Glas Trust Company and Investor Timothy R. Pohl in the Delaware Chancery court.
The lawsuit states BYJU's Alpha, Tangible Play Inc and Riju Ravindran as defendants.
The allegations were revealed during a court hearing on Thursday, reported CNBC TV 18. According to lenders because the company defaulted in payment they have the right to put Timothy R, Pohl as the person in charge.
This is the latest step back for the startup founded by Byju Raveendran. BYJU was already working on convincing the creditors to restructure the $1.2 billion term loan when the government investigators began searching for the company's officers in April.
Alpha transferred $500 billion dollars out of the company
Earlier this year a top manager at the edtech major's US arm admitted to having transferred half a billion dollars out of the company, stated Broz Czeschin, one of the lawyers representing Glas Trust company, during the hearing that was held on telephone. In response to this Joe Cicero, a lawyer defending BYJU's Alpha said that this was done in order to protect the money from predatory lenders. He further added, the company had the right to transfer the money under the loan agreement. Though, the court did not make any ruling regarding the moving of money.
Court asks Alpha managers to not make any substantive changes
Delaware Chancery Court Judge Morgan Zurn sided with the lenders after it ordered BYJU's Alpha's managers to not make any substantive changes at the company. The judge went on to schedule a trial to decide who controls BYJU's Alpha later this year.
BYJU's denied the allegations and in a statement to CNBC TV18 said, "As BYJU’S Alpha is a non-operative entity, the funds were transferred to other operative entities for growth and expansion in its global operations. BYJU'S entered into the Term Loan B agreement with the clear intention of utilising the raised funds to drive growth and expansion in its global operations and is free to transfer and use the funds as necessary."
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