Byju's Founders' Threat of Defamation Case an Attempt to Distract from Facts: Glas Trust
The ongoing legal battle between Byju’s founders and Glas Trust escalated as the trustees accused the founders of attempting to distract from multiple court rulings against them by threatening to file a defamation suit. Glas Trust, which represents lenders to whom Byju’s owes $1.2 billion, alleges that the defamation threat is a "desperate and meritless" move following judicial setbacks—including a contempt ruling in a US federal court against Byju Raveendran.
Byju Raveendran and Divya Gokulnath, co-founders of the edtech giant, have announced plans to file a $2.5 billion defamation lawsuit against Glas Trust and other lenders, claiming the allegations and legal proceedings have severely harmed their reputations and businesses. Their legal counsel has denied all allegations of wrongdoing and stated that the contempt order is actively being contested.
Glas Trust has strongly countered, saying every court presented with the issues has ruled against Byju’s founders and labeling Raveendran and his associates as fraudulent in connection with a scheme to conceal $533 million in loan proceeds from a $1.2 billion Term Loan B facility. The trust currently controls Byju’s Alpha, a special-purpose vehicle established to receive loan funds from these lenders.
Key Highlights of the Dispute
Glas Trust accuses Byju’s founders of orchestrating a scheme to misappropriate $533 million of loan funds.
US federal courts have found Byju Raveendran in contempt and noted attempts to interfere with witnesses.
Byju’s founders maintain that the proceedings are incomplete and all accusations are being vigorously contested.
Byju’s legal team plans lawsuits in Indian and international courts seeking substantial damages and reputational redress.
Glas Trust asserts it has always acted within its rights as a trustee for lenders and that the defamation threats serve to distract from established facts.
Implications of the Case
This high-profile legal tug-of-war exposes complex issues in India’s startup funding and debt enforcement ecosystem.
The outcome will influence investor confidence in edtech and other high-growth sectors facing financial distress.
It underscores increasing scrutiny on startup founders' conduct in managing large-scale funding and debt obligations.
Courts and regulators continue to balance protecting lender rights and founder reputations amid insolvency proceedings.
Frequently Asked Questions (FAQ) ?
Q: What is the basis of Glas Trust’s allegations against Byju’s founders?
A: Glas Trust alleges that Byju’s founders, including Byju Raveendran and Divya Gokulnath, executed a scheme to misappropriate $533 million from a $1.2 billion loan, and have been non-compliant with court orders.
Q: How are Byju’s founders responding to these allegations?
A: They deny all accusations, state that legal proceedings are ongoing, and plan to file a $2.5 billion defamation suit against Glas Trust and lenders for reputational damage.
Q: What legal rulings have affected the case so far?
A: US federal courts have held Byju Raveendran in contempt, and Indian courts have ruled in favor of lenders in insolvency proceedings involving Byju’s.
Q: What role does Glas Trust play in Byju’s loan structure?
A: Glas Trust is the trustee for lenders who provided Term Loan B financing to Byju’s US arm, and it currently controls Byju’s Alpha, the special-purpose vehicle set up for this loan.
Q: How might this legal dispute impact Byju’s business and stakeholders?
A: The dispute may affect ongoing insolvency proceedings, investor confidence, and Byju’s ability to raise or manage funds, influencing the company’s long-term viability.
Published on: July 21, 2025
Published by: PAVAN
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