Byju’s Hedge Fund Ally Seeks To Keep Lawyers As Cash Runs Out
A 27-year-old hedge fund manager accused of helping Byju’s hide $533 million from lenders has only $3,000 in cash left to defend himself from a lawsuit against himself and the troubled Indian tech firm.
(Bloomberg) -- A 27-year-old hedge fund manager accused of helping Byju’s hide $533 million from lenders has only $3,000 in cash left to defend himself from a lawsuit against himself and the troubled Indian tech firm.
William Morton pleaded with a federal judge on Tuesday to not let his lawyers quit, arguing he hasn’t been able to find a new law firm to represent him in the bankruptcy case of a Byju’s unit now controlled by lenders that are owed $1.2 billion.
“This is a very awkward position for me to be in,” Morton told US Bankruptcy Judge John Dorsey in Wilmington, Del. Morton said he has less than $3,000 left in his personal and business accounts. He added that Byju’s had pledged to pay his legal bills but quit funding his lawyers. A Byju’s representative could not be reached for comment.
Dorsey delayed ruling on requests by Morton’s lawyers and the law firms representing Byju’s to quit the case. After all sides have presented their final arguments in the case, possibly next month, the judge said he will decide whether to release the attorneys.
Both teams of lawyers blame their clients for the breakdown. Morton’s main lawyer, Pieter Van Tol, said his firm is owed “several million” dollars. In federal court, even when a client refuses to pay a lawyer, a judge must decide whether the attorney can quit.
After the hearing, Morton said his Miami-based Camshaft Fund has run out of cash and owes money to creditors. “I’m doing everything possible to piece the business back together,” he said, noting that Byju’s is no longer a client. Camshaft Fund has some hard-to-sell assets that Morton said he is trying to avoid liquidating at fire-sale prices.
Lenders are trying to track down $533 million that Morton received from Byju’s in 2022, court papers show. The money was later transferred beyond the lenders’ reach to a non-US entity on orders from Byju’s managers, according to court records.
Morton and Byju’s face a fraudulent-transfer lawsuit in the bankruptcy case of Byju’s Alpha, a shell company created by Byju’s in order to tap US capital markets. After Byju’s defaulted, lenders seized control of the the shell company, put it under court protection and sued to get $533 million they claim should go to them.
Dorsey had previously held both Morton and a Byju’s manager in contempt of court for refusing to help find the cash, which is at the heart of a dispute between US lenders and the startup founded in India by entrepreneur Byju Raveendran. The education-tech company’s official name is Think & Learn Pvt.
The US bankruptcy case is BYJU’s Alpha Inc., 24-10140, US Bankruptcy Court District of Delaware (Wilmington).
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