Reportedly, a "rogue officer" manipulated Apple into changing the ownership and revenue streams of these two apps that generated around $1 Mn monthly revenue
The trustee alleged that the money that should be used to repay creditors was instead siphoned off to Whitehat Education Technology
It is pertinent to note that this development comes as a small part of the bigger battle between BYJU’S and US lenders, as the former owed 1.2 Bn to the latter
A federal judge has ruled that two educational apps, part of BYJU’S
software empire, were wrongly transferred away from US lenders and must be returned to a court-supervised bankruptcy trustee
As per Bloomberg’s report, a “rogue officer” manipulated Apple into changing the ownership and revenue streams of these two apps that generated around $1 Mn monthly revenue.
The apps are used by parents to download education materials for their children, Catherine Steege, a lawyer for the US units, has said. The transfer happened shortly after the trustee took control of the bankrupt units: Epic! Creations, Neuron Fuel, and Tangible Play.
This comes after a trustee for the affiliates filed a lawsuit in federal court in Delaware in October. The trustee alleged that the money that should be used to repay creditors was instead siphoned off to Whitehat Education Technology. Allegedly, a total of $700K was moved from these entities into BYJU’S account.
It is pertinent to note that this development comes as a small part of the bigger battle between BYJU’S and US lenders, as the former owed 1.2 Bn to the latter.
Both parties have been tussling not just in state and federal courts in the US, but also in India where the edtech company is already facing an insolvency proceeding.
Notably, in India, the court has appointed Pankaj Srivastava as insolvency resolution professional.
Srivastava who is tasked with raising money to repay creditors has received backlash from Glas Trust, as well as other creditors. Yesterday, they urged the National Company Law Tribunal (NCLT) to remove Srivastava as the RP and the reconstitution of the committee of creditors.
The appeal was also supported by the counsel appearing for another disgruntled creditor of BYJU’S, Aditya Birla Finance. He submitted that the RP has accepted just one party as financial creditor for the embattled company.
Meanwhile, reports also suggest that the Board of Control for Cricket in India (BCCI) is looking to ask the NCLT to stop its insolvency case against BYJU’s on Wednesday (November 12).
Last month, the Supreme Court (SC) had restarted the insolvency proceedings at BYJU’S by setting aside a prior NCLAT ruling dismissing the same. As part of the reinitiation of the bankruptcy proceedings, the SC ordered the BCCI to deposit the settlement amount of INR 158 Cr with creditors.
The drama at the Tribunal’s hearing comes days after the matter was heard at the Karnataka High Court. According to reports, the HC barred the CoC from meeting and taking decisions on the company’s affairs till the NCLT decides on the applications to remove the RP.
The next hearing at the NCLT is scheduled for November 18.
