Byju founder accused of trying to revive business with hidden cash

(Bloomberg) — The founder of bankrupt Indian technology company Byju’s tried to secretly buy back a software company that was taken over by a U.S. trustee using loan proceeds he allegedly hid from U.S. lenders, according to a new court filing.

Byju Raveendran has been trying to regain control of his crumbling education technology empire, which is subject to court oversight both in India, where the parent company is based, and in the United States, where some of its valuable divisions are based, according to a court declaration filed by Byju Raveendran. William R. Heller, a Nebraska businessman.

Ravindran allegedly recruited Heller, a former political consultant, to try to acquire more than $1.2 billion in loans owed by U.S. creditors, according to documents filed in U.S. Bankruptcy Court in Delaware. Raveendran could then trade that debt, which was trading at about 0.24 cents as of Wednesday night, for ownership of educational software company Epic! The plan ultimately failed.

“Over the past several months, I have been used as a pawn in Byju’s manipulation of the law,” Heller wrote in his deposition. Heller will testify in federal court on Thursday on behalf of a trustee who is planning to sell Epic! to raise funds for Byju’s creditors, including U.S. lenders.

Representatives for Byju’s and Raveendran’s attorney did not respond to requests for comment.

Ravindran has denied wrongdoing in past responses to lender allegations, saying his actions were a legitimate response to overly aggressive tactics used by creditors who specialize in squeezing money from troubled companies.

This summer, as Heller began negotiating with lenders, Ravindran wired $11.25 million to a company Heller ran called Rose Lake Inc. Heller was supposed to use the cash to prove to lenders that he had sufficient funds. The money will then be returned to Ravindran, Heller said.

Heller’s court documents show that the money came from OCI Ltd., a logistics company incorporated in the United Kingdom that received hundreds of millions of dollars in loan proceeds that U.S. lenders have been trying to recoup.

Hailer said he tried without success to gather evidence that OCI still held funds on behalf of Byju’s, despite Raveendran’s claims that all the cash had been spent. Heller said that for several months he spoke frequently with Ravindran and other Indian traders involved in the Byew empire. Heller also visited Ravindran’s family compound in Dubai and held talks with investors who were said to be supporting Ravindran’s bid to regain control of Byju’s.

Lenders have been fighting Byju’s in U.S. state and federal courts for more than a year. Lenders claim Ravindran hid $533 million in loan proceeds that should have been repaid to creditors. In India, Byju’s is facing insolvency proceedings, where court-appointed professionals are responsible for raising funds to repay lenders.