Indian edtech major
Byju's
is embroiled in a financial controversy as a US court hearing looms regarding the whereabouts of $533 million that the company invested in an American hedge fund. This comes amidst separate claims from Byju's employees who allege salary delays due to a dispute with
investors
locking funds raised through a recent rights issue.
"Camshaft, in its latest submission, has disclosed to the Delaware Court that the $533 million was transferred from BYJU'S Alpha to another 100 per cent Think & Learn owned subsidiary, Inspilearn LLC (a Delaware firm). "As BYJU's has indicated previously - the funds continue to remain in a Think and Learn subsidiary, contrary to the false allegation made by a select list of investors before the NCLT in India," Byju's said in a statement.
Byju's claim: No money for employee salaries
According to a report by news agency PTI, on March 2, Byju's stated that it had no money to pay salaries to employees after just-raised funds through the rights issue were locked (in a separate account) after a dispute with investors. It is not reportedly clear if Byjus is the beneficial owner of $533 million, then why it could not use them for paying salaries.
Byju's maintains ownership of the disputed funds. In a statement released, the company asserted that its US subsidiary remains the "beneficial owner" of the $533 million, currently held by a subsidiary of its Think & Learn division. This contradicts accusations from some investors who allege that the funds were "siphoned off."
Court hearing and investor dispute
The upcoming US court hearing will determine the location of the funds. A Florida hedge fund, Camshaft Capital Fund, previously managed the investment but has been ordered to disclose its current location or face potential sanctions. Separately, a group of Byju's investors challenged the company in court, seeking to halt a recent rights issue and accusing management of mismanagement.
Byju's has vehemently denied all allegations. The company claims the investors who challenged them and the creditors seeking information on the $533 million are engaged in "predatory" tactics. Byju's asserts their credit agreements allow for the movement and investment of funds.
"The latest disclosure dispels fake narratives about $533 million being siphoned off. To be sure, BYJU'S through a US-based single-purpose entity, BYJU'S Alpha, raised $1.2 billion in 2021 to finance international operations.
"The Credit Agreement with the lenders does not prohibit or restrict the usage, movement or investment of funds disbursed. Further, there is no requirement to maintain cash as collateral for the lenders under the Credit Agreement," the statement by Byju's said.
English (US) ·