Byju’s senior executive and a close associate of the company’s founder have been found in contempt of court in the United States and now face financial penalties of $25,000 per day for failing to comply with a federal court order. The ruling adds further legal pressure to the embattled Indian edtech firm, which is already facing intense scrutiny over its financial dealings and mounting debt obligations of more than $1.2 billion.
A federal judge in Delaware ruled on Wednesday that Byju’s manager, Vinay Ravindra, and company associate Rajendran Vellapalath failed to provide testimony regarding their involvement in transferring software, cash, and other assets from Byju’s US subsidiaries. These businesses, Epic! Creations and Tangible Play, are currently under court supervision as part of an ongoing bankruptcy case. The judge also found that Vellapalath’s company, Voizzit Information Technology, violated US law by filing a lawsuit in India in an attempt to take control of these assets, which remain protected under US bankruptcy law.
This ruling is the latest development in a series of legal battles for Byju’s and its founder, Byju Raveendran. US courts have previously sanctioned Raveendran’s brother, Riju Ravindran, and hedge fund executive William C. Morton for refusing to account for $533 million in missing loan proceeds. Both eventually avoided penalties by appearing in court.
Attorneys for Vellapalath and Voizzit have stated that they are taking steps to resolve the contempt order and maintain that their clients acted in good faith. Byju’s has not commented on the ruling against Ravindra.
Once India’s most valuable startup, Byju’s is now facing bankruptcy proceedings in India following its loan defaults. Lenders are working to liquidate its US assets, which the company had acquired for $820 million during its rapid expansion.
In a related development, a business court in India ruled in favour of Byju’s creditors by reinstating Glas Trust Co., the lenders’ representative, on a key creditors’ committee. The court also ordered an investigation into allegations that a court-appointed restructuring official had improperly removed Glas Trust from the committee last year.
Lenders have welcomed the Indian court’s decision, calling it a significant step toward ensuring legal accountability. Meanwhile, Vellapalath had previously claimed in US court that Voizzit, not Byju’s, owned Epic! and Tangible Play, arguing that a $100 million loan to Byju’s in 2023 granted Voizzit ownership rights over the assets. The US bankruptcy judge dismissed this claim, stating that Vellapalath lacked credibility.
Byju Raveendran has consistently denied allegations of financial misconduct, arguing that his actions were necessary to counteract aggressive lender tactics. However, creditors maintain that he deliberately concealed $533 million in loan proceeds that should have been used for debt repayment.
With escalating legal battles in both the US and India, Byju’s future remains uncertain as regulators and courts continue to scrutinise the company’s financial activities.
