Major Relief for Byju’s in the US: Court Overturns Penalty in Alleged $533 Million Diversion Case

New Delhi: Embattled ed-tech giant Byju’s has secured significant relief in the United States. A US bankruptcy court has overturned a previous ruling that imposed a $1 billion penalty on company founder Byju Raveendran. The development marks a major reprieve for the once most-valued Indian startup.

The earlier ruling, delivered on 22 November, had accused Raveendran of repeatedly ignoring court orders and failing to participate in legal proceedings. Byju’s parent company, Think & Learn, confirmed that the penalty order has now been set aside.

The Loan and the Allegations

A group of lenders that extended a $1.2 billion term loan to Byju’s subsidiary Byju’s Alpha had filed a default case against Raveendran on 11 August.
According to filings in the bankruptcy court, Byju’s Alpha allegedly diverted $533 million of the loan through London-based company OCI Limited, raising allegations of “round-tripping”.

Court’s Stand and Next Steps

Think & Learn’s founders stated that after Raveendran submitted new arguments, the court acknowledged that the extent of damages had not yet been determined. The court is expected to assess the damages associated with the allegations next month.

Raveendran’s litigation counsel, Michael Macnut, said that during the damages trial scheduled for January 2026, they will demonstrate that the plaintiffs suffered no harm. He further accused the lenders’ representative, Glass Trust, of deliberately misleading the court in multiple proceedings.
He added that Byju’s would also be seeking appropriate relief through Delaware courts and a planned $2.5 billion lawsuit later this year.

Company’s Position

Raveendran maintains that no diversion of funds occurred. According to him, the alleged $533 million was used to fuel global expansion of Think & Learn, not moved improperly.
He claims that Glass Trust and the Resolution Professional (RP) appointed over Think & Learn wrongly accused the company of fund diversion, thereby misleading the courts.