US court bars Byju’s from using $533mn it borrowed

MUMBAI: In a major setback for troubled startup Byju’s, a US bankruptcy court has passed an order in favour of the edtech company’s term loan lenders, disabling the firm from transferring or using $533 million received as part of loan proceeds, essentially freezing the assets.
The loan amount – which has been at the centre of dispute between Byju’s and its lenders – has been transferred from an obscure hedge fund Camshaft Capital, where it was previously held to an unnamed offshore trust, the group of lenders said in a statement on Friday. The court has asked founder and group CEO Byju Raveendran and wife Divya Gokulnath to comply with the ruling.

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It has also ordered the arrest of William Morton, founder of Camshaft Capital, following his repeated refusal to appear in court and provide any information regarding the transfer of $533 million and the current status and location of the funds. “The fact that the parent company (Think & Learn) is attempting to hide where the assets are is huge. It shows that they are engaged in what appears to be a potential fraud,” the court observed in its ruling.
Byju’s had recently said that the $533 million has been parked with a non-US subsidiary of the firm but did not disclose any details. In a statement, Byju’s said the court order merely maintains “status quo” because it has always maintained that the said funds are parked in one of its subsidiaries.

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