Founders of BYJU'S - Byju Raveendran and Divya Gokulnath - to appeal Delaware bankruptcy court's default judgementByju Raveendran, the embattled co-founder of BYJU’S and Think & Learn Private Limited (TLPL), has said he will appeal a Delaware bankruptcy court’s default judgment that holds him personally liable for over $1.07 billion. According to a statement shared by his legal team, the ruling was “issued on an expedited basis, and precluding Byju from presenting a defence,” after the court accelerated its scheduling orders and left him with little time to retain counsel.
The dispute arises from the controversial handling of a $1.2 billion Term Loan B (TLB) raised in 2021 through BYJU’S Alpha, Inc., a Delaware-based special-purpose vehicle (SPV) created to manage the funds. According to the reports, the lenders, represented by GLAS Trust Company LLC, allege that about $533 million moved out of the SPV without appropriate disclosures or lender approval. However, Raveendran’s representatives dispute this characterization, asserting that the loan funds “were used by Think & Learn Private Limited, not for Byju’s personal gain.”
Claim for damages reportedly withdrawn months earlier
According to the statement issued by by Raveendran’s legal team, the Delaware court’s monetary judgment was issued despite the claim for damages having been withdrawn in September 2025. The statement argues that GLAS Trust continued to provide “misleading information” in its filings and to the court, which they say “negatively affected the decision” and resulted in a premature default judgment.
“The judgement is a default judgment meaning that the Court issued this judgement without Byju being permitted to present a defence and instead deprived Byju of the presentation of a defence by relying on its prior Order of Contempt. Byju will dispute also that order as part of the appeal of this Judgement. GLAS has improperly claimed that it lacks the information of the use of the $533 million,” said the statement
What is BYJU’S Alpha, and why it matters?
BYJU’S Alpha, sometimes informally referred to as “Alpha Trust” in media summaries, is a non-operational U.S. SPV, incorporated in Delaware. Its sole purpose was to manage the $1.2 billion TLB, with GLAS Trust serving as the administrative and collateral agent on behalf of global lenders.
The SPV became central to the dispute after lenders alleged that a portion of the loan – the $533 million — was diverted after being transferred to a U.S. hedge fund and subsequently routed through affiliated entities. The founders, however, maintain that the funds moved through TLPL for business purposes and contest the narrative of diversion or misuse.
Founders plan extensive legal counteraction
Beyond appealing the default judgment, the BYJU’S founders plan to initiate broader federal claims in U.S. courts, including allegations of racketeering, obstruction of justice, and other misconduct by GLAS Trust and related parties. According to the founders’ legal advisers, these federal claims are estimated at “not less than USD 2.5 billion.”
Senior litigation adviser J. Michael McNutt said the legal team believes the Delaware court “erred in its judgment” and that Raveendran was “deprived of the presentation of a defence” due to the rapid procedural timeline.
Key questions that remain
Several important aspects of the case remain unclear from the publicly available documents:
- The exact breakdown and tracing of the alleged $533 million outflow from BYJU’S Alpha.
- The full terms of the guarantees and covenants governing the TLB loan structure.
- The procedural basis for the Delaware bankruptcy court’s decision to issue a default judgment, including whether notice or service irregularities occurred.
- The extent to which TLPL’s insolvency proceedings in India will intersect with ongoing U.S. litigation.
Wider implications for Indian startups operating globally
The case represents one of the most significant instances in which an Indian founder faces personal liability in a foreign court. It highlights the risks associated with offshore financing structures, cross-border special-purpose vehicles, and aggressive lender remedies when contractual disputes escalate.
The outcome of the appeal and the forthcoming federal claims could shape how Indian startups structure large international loans and how founders manage personal exposure in cross-border borrowing.
LAFFAZ will continue to follow updates from the Delaware courts, U.S. federal filings, and any related legal actions in India as the case evolves.
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