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June 12, 2024

Byju’s Hedge Fund Manager May Avoid Arrest by Locating $533 Million

In a bid to untangle the intricate bankruptcy proceedings of a Byju’s subsidiary, a federal judge has offered a reprieve to a Florida hedge fund manager if he can help trace $533 million that the Indian ed-tech giant is accused of hiding. This move comes amidst ongoing efforts by lenders to recover the substantial sum allegedly misappropriated by Byju’s.

On Tuesday, US Bankruptcy Judge John Dorsey, presiding in Wilmington, Delaware, agreed to lift an arrest order for William C. Morton, the founder of Camshaft Fund, provided he aids in locating the missing funds. Court records reveal that Byju’s invested $533 million of loan proceeds with Morton’s hedge fund last year. Subsequently, the funds were transferred to a UK lender and then to an undisclosed non-US entity linked to Byju’s. Lenders are leveraging the bankruptcy case of Byju’s US-based unit to reclaim the money.

Judge Dorsey commanded Morton, who participated in the hearing via video from Dubai without speaking, to return to the US and engage with Byju’s lenders’ attorneys within ten days. Dorsey sternly noted that if Morton, who is accused of evading US authorities to dodge questioning, fails to comply, the arrest order will be reinstated. “We need to move this case forward somehow,” Dorsey emphasized.

At the core of this controversy is a conflict between lenders owed $1.2 billion and the startup, officially known as Think & Learn Pvt., founded by entrepreneur Byju Raveendran. The disputed $533 million is part of the assets of Byju’s Alpha Inc., a bankrupt shell company affiliated with Think & Learn, which lenders took control of following a loan default.

Morton’s attorney, Pieter Van Tol, assured the court that his client, a young financier in his 20s, is prepared to testify under oath and assist the lenders. Van Tol explained that Morton had previously refused to engage with lenders in Miami, the base of his hedge fund, due to fears of arrest. Despite the judge’s decision, Van Tol declined to provide further comments post-hearing.

The bankruptcy case, officially titled BYJU’s Alpha Inc., case number 24-10140, is being adjudicated in the US Bankruptcy Court District of Delaware.

This latest development marks a significant turn in the ongoing legal drama surrounding Byju’s financial troubles. The company, a prominent player in the global ed-tech industry, faces immense pressure to resolve its financial discrepancies and restore credibility with its lenders and investors. Judge Dorsey’s decision to potentially lift Morton’s arrest order underscores the judiciary’s focus on resolving the case expediently and transparently.

Read more Business related news on R9 News
Jhumpa Lahiri

Jhumpa Lahiri

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