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US judge orders Byju’s to restore ownership of  million-a-month education apps transferred to lenders
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US judge orders Byju’s to restore ownership of $1 million-a-month education apps transferred to lenders

Two lucrative educational apps that are part of Byju’s struggling software empire were wrongly transferred from U.S. lenders and must be returned to a court-supervised bankruptcy trustee, a federal judge ruled Tuesday.

A ‘rogue officer’ manipulated Apple Inc. into changing ownership — and revenue source — of two apps that bring in about $1 million a month, according to the administrator, who controls three of Byju’s U.S. units .

The apps are used by parents to download educational materials for their children, Catherine Steege, an attorney for the U.S. units, said during a virtual hearing Tuesday. The transfer took place shortly after the trustee took control of the bankrupt units: Epic! Creations, Neuron Fuel and Tangible Play.

Since the administrator, Claudia Springer, was awarded control of the three units by a federal judge, unknown parties led by India-based Byju’s have been collecting money, moving source code away from cloud systems managed by Apple and Alphabet Inc.’s Google and changing the names of various online accounts, Steege said.

“These bad actors started playing ‘catch me if you can,'” Steege told U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware. They “try to stay one step ahead of the trustee.”

Dorsey ordered Apple to return ownership of applications to US units. A lawyer for an Indian company that had been wrongly given ownership of the apps tried unsuccessfully to persuade Dorsey to delay his decision.

The dispute is the latest clash between Byju’s and its American lenders. According to Byju’s, whose official name is Think and learn Private Ltd., defaulting on more than $1.2 billion in debt, U.S. lenders took control of a Byju shell company and forced three small U.S. subsidiaries into bankruptcy.

A representative for Byju’s did not immediately respond to a request for comment.

Byju’s bought the companies just a few years ago for $820 million, according to court records. Springer is set to hold an auction for at least two units to raise the funds needed to repay Byju’s creditors, including U.S. lenders.

Lenders are fighting Byjuhas been before U.S. state and federal courts for more than a year. Byju’s is facing insolvency proceedings in India, where a court-appointed professional has been tasked with raising funds to repay its creditors. This professional, Pankaj Srivastava, requested the US court not to take any action regarding the three US units, as they belong to Byju and could be used to repay creditors in India.

Dorsey rejected those claims, saying the units are entities incorporated in the United States and subject to U.S. bankruptcy courts.

The company’s founder, Byju Raveendran, has denied any wrongdoing, saying his actions were justified in response to overly aggressive tactics used by lenders who specialize in extracting money from struggling businesses.

The affair is epic! Creations, Inc., 24-11161, United States Bankruptcy Court, District of Delaware (Wilmington).