Byju's is in serious financial trouble, its lawyer told the US court (Representational)
Tech firm Think & Learn Pvt must freeze $533 million to protect the money for disgruntled lenders who claim the cash should only be used to pay them, a US judge said on Thursday.
The decision by US Bankruptcy Judge John Dorsey was a mixed victory for lenders. They earlier demanded the money be placed under the control of the federal court to prevent the cash from being spent by the education-tech firm, which operates under the name Byju's.
Judge Dorsey's 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, Judge Dorsey said.
A representative for Think & Learn declined to respond to a request for comment.
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 had been overly aggressive in claiming the debt was in default, Korpus told the judge. 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 Judge Dorsey'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, Judge Dorsey 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 Judge 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.
The missing money is at the heart of a fight between lenders owed more than $1.2 billion and Think & Learn. The $533 million was transferred to Morton's hedge fund and then moved to an unnamed, off-shore trust, Byju's Alpha lawyer Benjamin Finestone said last week.
Byju's is in serious financial trouble and faces disputes with its shareholders and court fights with its lenders, Finestone said during the hearing. 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.
"It is substantively important that we get these funds, because the walls are crumbling," Finestone told Judge Dorsey during the hearing.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)