&w=1024&resize=1024,0&ssl=1 "Baiju founder denied fraud, saying lost funds were used for legitimate purposes Company News")
The founder of Baiju's, a leading Indian education company that defaulted on its US loans, has denied masterminding a scheme to fraudulently transfer $533 million from creditors.
On a day when a judge is considering creditors' fraudulent transfer claims against his company, Baiju Ravendran presented in court for the first time his explanation of what happened to the money, which creditors have been trying to locate for more than a year.
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The company borrowed $1.2 billion about three years ago as it planned to use most of the proceeds for international expansion, Ravendran said. More than $200 million from the loan was spent on marketing, including sponsoring the FIFA World Cup in Qatar in 2022 and signing superstar Lionel Messi as a brand ambassador. Approximately $300 million was spent on tangible losses in the gaming business.
“However, just as we were prepared to see a return on this strategic investment, we were faced with a liquidity crisis,” he said in a filing Wednesday morning in U.S. Bankruptcy Court in Wilmington, Delaware.
commercial purpose
The $533 million — which creditors allege was transferred to companies linked to the founder — was used for a “legitimate business purpose,” Ravindran argued in his lawsuit.
His claims were challenged by the creditor's lawyer, who claimed that Baiju had manipulated his accounts. Ravi Subrahmanya Shankar told the court on Wednesday: “The Rabindran brothers indulged in a game of deceit” to hide where the money went.
Lenders have long seen the so-called Alpha Fund as their best opportunity to recoup some of their $1.2 billion when the Covid-era lockdown made the online learning company one of India's most valuable startups.
The two sides have been fighting in state and federal courts for more than a year over what happened to the money. The founder told creditor consultants at a meeting that “money is a place where creditors will never find it,” the creditors said in court documents.
In Wednesday's announcement, Ravindran said he never used those words.
The entire fraud and money laundering case was “based on a statement that your representative wrote on a paper napkin and attributed to me,” he said. During the meeting with advisors, he wanted to explain to borrowers that the resources “will be used for the purpose for which they are intended”.
International expansion
Ravindran said that after obtaining the loan, Baiju needs to utilize the funds for its international expansion as quickly as possible and has entered into an agreement with OCI Ltd, a UK-incorporated logistics company that provides logistics equipment procurement services. IT and advertising.
When Baiju failed to pay its debts, OCI exercised its “right of compensation” against Alpha Fund.
“Neither I nor any of the founders of T&L (the borrowing unit of Byjus) personally received any part of the Alpha funds or any part of the funds distributed under the credit agreement,” he said in the document.
Instead, the creditor's attorney alleges that Baiju initially sent $533 million to a small hedge fund in Miami that had less than $10 million in assets under management at the time. Hedge funds send money to OCI in exchange for unsecured promissory notes, he said.
Shankar said OCI spent the money, which reduced the promissory notes by the same amount. The goal of the financial structure was to record the $533 million as an asset rather than debt, he said.
