BYJU’S defamation lawsuit is set to be filed by founders Byju Raveendran and Divya Gokulnath, who plan to claim US $2.5 billion in damages against GLAS Trust and associated parties, alleging a “coordinated conspiracy” that harmed their business and reputation
The lawsuit comes in response to multiple allegations made by GLAS Trust and lenders — especially about a disputed $533 million loan related to BYJU’S U.S. arm, BYJU’S Alpha. The founders claim that the money was not misused or siphoned off, but was properly invested into the parent company, and that the lenders knowingly misled courts.
Background: Loan Dispute with GLAS Trust
The root of the conflict lies in a $1.2 billion term loan taken by BYJU’S Alpha, for which GLAS Trust acted as trustee for the lenders. Lenders later alleged that around $533 million of loan proceeds were “round-tripped” or diverted improperly. This triggered litigation in U.S. bankruptcy court (Delaware) and insolvency proceedings in India.
Recently, a Delaware court found Byju Raveendran in civil contempt for non-compliance with certain orders and imposed daily fines. The founders reject both the misuse allegations and the contempt order, calling them baseless and misleading.
What BYJU’S Is Claiming: Grounds for Defamation Suit
According to BYJU’S legal team:
- The $533 million was accounted for: transferred from BYJU’S Alpha to the parent company, and used for expansion — not diverted for personal gain
- GLAS Trust and the resolution professional allegedly misled multiple courts (in the U.S. and India), by concealing documents and making false statements about the use of funds and fund flows.
- The lawsuit will target not just GLAS Trust, but “all entities and individuals who participated in this coordinated conspiracy.”
What This Means for BYJU’S, Lenders and Broader Stakeholders
- Legal risk for lenders and trustees: A successful defamation suit could expose GLAS Trust and others to enormous damages — and potentially force a re-examination of prior judgments.
- Reputation at stake: BYJU’S aims to clear its name — especially relevant for employees, investors, and customers — by claiming that allegations of “fund diversion” were false.
- Cross-jurisdiction complexity: The lawsuit is expected to be filed not just in U.S. courts but also in India and other relevant jurisdictions.
- Implications for the edtech sector: The case — involving large cross-border funding, loan trustees and fund flows — may set a precedent for how edtech and fintech firms are financed, audited, and held accountable globally.
What Happens Next & What to Watch
- BYJU’S legal team plans to submit fresh evidence to the U.S. courts arguing that the funds were used legitimately and lenders concealed that fact.
- Indian courts may also see separate proceedings, depending on how the lawsuit unfolds. Business Standard
- Market and investor reaction will be important — depending on how courts rule and how the dispute affects BYJU’S ability to raise capital or continue operations.
