Daybreak - Did someone just find the US$533 million that Byju’s lost?

Episode Date: November 27, 2024

Bloomberg recently published a damning report about Byju’s according to which Byju Raveendran, the edtech’s founder, allegedly tried to convince an American businessman to leave the country so he wouldn't have to testify in a federal court about the suspicious activities he saw while working for the edtech.However, William R Hailer, the businessman, filed a declaration in the US Bankruptcy Court in Delaware, where he said: ““Raveendran arranged a ticket for me to Dubai on Emirates out of Chicago Illinois to avoid testifying and to be out of the country as an excuse if required to testify.”  Now, if you’ll remember, in Sept this year, the highest court in Delaware, USA had upheld a ruling by a lower court that said the edtech firm Byju’s had indeed defaulted on infamous $1.5 billion loan. Which basically meant , that the lenders could demand full repayment, and take control of Byju’s US entity Byju’s Alpha Inc, and also appoint Timothy Pohl, Alpha Inc’s court-appointed CEO, as its sole director.In this episode based on the latest edition of The Ken's newsletter Ed Set Go, we delve into the latest twist in the Byju's saga.Tune in.Daybreak is now on WhatsApp at [phone]. Text us and tell us what you thought of the episode!Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

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Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first studio recording, episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Hi, I'm Rahir, the co-host of Daybreak. Before we begin this episode, I have a confession to make. Sometimes hosting a podcast can feel like speaking into the void. You see, we're constantly trying to improve your listening experience and make the same.

podcast better. In fact, for those of you who have been listening for a while, you would know that daybreak underwent quite a makeover this year. We went from three episodes a week to five. We introduced a new special Friday episode. We got a whole bunch of really interesting people on the show. We even introduced a whole new segment, Daybreak Unmined. But the point of all of this is you, our listener. We want this podcast to be a valuable addition to your day. But for that to happen, we need to ask you. actually hear what you think. The easiest way to do that

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at the rate the hyphenken.com or text us on WhatsApp. Our number is 8971-08379. We will also add it to the show notes of this episode. Thank you. And now on to the episode. So, we are going to be trying something different today. I am going to read out the latest edition of the Ken's very popular ed tech newsletter called Ed Setco by our writer Ulina Banerjee. Olina has been covering the ed tech sector for a while now and if you are a regular

listener of daybreak, you may have heard her on one of our Friday special episodes. In this edition, Ulina gave us a really interesting. and comprehensive perspective on the latest happenings vis-à-vis Bayju's. Now, for some context, Bloomberg recently published a damning report about Bayju's. The report said that Baiju Ravindran, the Ed Tech's co-founder, allegedly tried to convince an American businessman to leave the country so he wouldn't have to testify in a federal court about the suspicious activities that he saw while working there. But William R. Haler, the businessman in question,

filed a declaration in the U.S. bankruptcy court in Delaware, where he said, and I'm quoting, Ravindran arranged a ticket for me to Dubai on the Emirates out of Chicago, Illinois, to avoid testifying and to be out of the country as an excuse if required to testify. End quote. Now, if you remember, in September this year, the highest court in Delaware had upheld a ruling by a lower court that said that the attack firm by Jews had indeed defaulted on. the infamous $1.2 billion loan, which basically meant that the lenders could now demand a full repayment

and also take control of Bajou's US entity and also appoint Timothy Pole, the court-appointed CEO of the firm, as its sole director. All right, now that you have all this context, let's get on with the episode. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nagda Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rahal Philippos and I will come to you with one business story that is worth understanding and worth your time.

Today is Wednesday, the 27th of November. After William C. Morton, the part-time investor, hedge fund manager and one-time YouTube interviewee, there is another character that's popped up in the never-ending tale of legal woes starring byju's. His name is William Hale. The first William, William Morton, ran a huge. hedge fund company called Cambshaft Capital. Campshaft had allegedly held 533 million US dollars for Bayju's till the money was moved to an offshore firm in the United Kingdom.

The group of lenders who'd lend Bayju's $1.2 billion for its U.S. operations alleged that this money was being hidden from them. And now there is a new twist in this tale. It seems that at least a part of those funds about 11, $11 million was sent to Haleur's Washington, D.C. based political consultancy firm called Rose Lake. In a statement made to the bankruptcy court in Delaware, Haler, the chief executive of Rose Lake alleged that Bayju Ravindran was using him to buy back the U.S. companies that he had lost control over, such as epic creations. William Haler claimed that Ravindran had sent him a ticket to Dubai to discourage him from testifying,

and that he had promised him the same quality of life that Ravindran's family now enjoys in Dubai despite the severely diminished ed tech business of Bai Jus. Hale also claimed that Ravindran had promised him a full-time position with a salary of at least $500,000 per year, along with an equity stake in the company. Hela said, and I'm quoting, I was also told by Ravindran that he would move me and my family to Dubai, arrange housing and schools and ensure that we have the same quality of life that he has. End quote.

While the first William, William Morton in this story, was not able to tell the court where the $533 million had gone, the second William, William Haler, has hinted at a firm called OCI in the United Kingdom, which may be holding this elusive half a billion with them. Between the two Williams, will we finally get to see the money that by, Jules lenders have desperately searched for.

For more strange things from William Haler's statement to the court, stay tuned. Ravindran, in his signature black t-shirt, used to command the attention of any room that he entered. This was back when Bajus was the ultimate name to contend with Inetec. He always had an entourage of media consultants and employees around him. That picture is now in stark contrast with what HALA detailed in his recent day. deposition, which is an image of someone who's trying to leave things behind even as he tries to set the record straight. Haler said that Ravindran did not really act like someone who ran a

legitimate business. And I'm quoting Hela, most times Bayju carried three phones. He used personal email instead of work email for communications. He would isolate people into individual meetings or only include for certain periods of time. End quote. And then there is this worrying if slightly funny detail, and I'm quoting again, on one occasion while Bayju was showing me how AI worked, a chat GPT screen showed a previous search for how to defend against corporate fraud accusations. End quote.

HALA also alleged that Ravenrin wanted to control Epic again, a company that Bayju is acquired in the US, which is currently controlled by a group of its lenders. Additionally, Ravindran allegedly told Haylor that he would give up more of, of his shares in the test prep giant Akash and use those funds to start a new business. What Ravindran can actually manage to do after this disclosure is unclear. There is a good chance that he may be held liable in the Delaware court for trying to sway

a witness. The real question in my mind, as in Olina's mind, what happens to Epic? The company was an institution in American schools and with parents. It had a solid brand recall, a spread-out distribution system across public schools, and a top-notch subscription-based business. How much of that survived byju's? In a separate lawsuit filed in October, a trustee appointed by the court to oversee byju's US assets alleged that money had been siphoned off from these entities to a company called White Hat Education Technology, which is owned by, you guessed it, Ravindran. The trustee said that a stripe account was used to drain out almost 700,000 US dollars from the US companies to the stripe account of White Hat education.

The trustee has asked the court to prevent any money being transferred out of White Hat now. I bring all of this up only to highlight that the American companies bought by byju's are likely out of fund themselves and more importantly, talent and resources. And the lenders, even if they get their $533 million back along with the rest of the term loan, will have to put time, effort and resources to shape these companies into saleable assets. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website.

Today's episode was hosted by Snigda Sharma and edited by Rajir Siyah.