A US bankruptcy court has given Byju Raveendran a breather, reversing the USD 1 billion damages ruling that had threatened to deepen the troubles surrounding the embattled edtech founder.

The order came after fresh submissions before the Delaware Court, which last month held him liable in a default ruling for allegedly refusing to cooperate with efforts to trace large portions of a USD 1.2 billion term loan raised in 2021.

Raveendran argued that the earlier ruling had denied him the 30 days he sought to appoint a US attorney and pledged to challenge the order. The founders of Think and Learn Pvt Ltd, the parent of Byju’s, said the court accepted those objections.

“The Delaware Court has reversed the USD 1 billion Judgement against Byju Raveendran, in view of fresh submissions made by Byju Raveendran through a motion to correct the Judgement of 20 November 2025. The Court agreed that damages had not been determined and ordered a new phase to commence in early January 2026 to determine any damages related to claims against Byju Raveendran,” the statement said.

The court added in its December 8 order that it will “amend its Default Judgment Opinion to remove those sections assessing damages against Byju Raveendran.” It asked the parties to present their positions on damages on January 7.

“An appropriate judgment order will be entered by the court following the completion of briefing on damages,” it stated.

The dispute has widened over the past year. Byju’s creditors, led by GLAS Trust, accused Raveendran, his co-founder wife Divya Gokulnath and executive Anita Kishore of “masterminding the theft” of USD 533 million in loan proceeds.

The founders rejected this, saying the money was infused back into Think and Learn to fund nearly USD 3 billion worth of acquisitions. In the new statement, they sharpened their criticism of the lenders.

“GLAS Trust and the lenders withheld or misrepresented information, misleading courts and the public, and contributing to the collapse of the business, the loss of roughly 85,000 jobs, impacting 250 million students, and the destruction of tens of billions in enterprise value,” it said.

The standoff may escalate further. The statement said Raveendran is weighing action against GLAS Trust, after earlier signalling he would sue for USD 2.5 billion.

His litigation advisor, Michael McNutt, said, “Byju Raveendran today has not been found liable to pay a single dollar in damages to the Plaintiffs (GLAS Trust Co LLC).”

He added that the next stage of the case, focused solely on damages, will allow Raveendran’s team to push back.

“During the damages proceedings starting January 2026, we intend to demonstrate to the Court that not only have the Plaintiffs suffered no damage whatsoever due to actions of Byju Raveendran, but also that the Plaintiffs have intentionally misled the Court in this proceeding and other adversary proceedings. We also intend to demonstrate that these Plaintiffs have sought to mislead Courts in India and elsewhere to gain advantage in those Court proceedings by harassing and damaging Byju Raveendran, Divya Gokulnath, and Riju Ravindran,” he said.

McNutt said the defence team “reserve the right to seek sanctions against GLAS Trust's counsel for their conduct in these proceedings,” adding: “We will seek the necessary remedy in the Delaware Courts and through the USD 2.5 billion lawsuit that we intend to file prior to the end of the year.”

The founders also claimed they will present evidence before US courts to counter the allegations related to the Alpha Funds.

The statement said GLAS Trust and the Resolution Professional managing Byju’s “repeatedly misled the Delaware Court, Indian and other Courts, and the public” by alleging the USD 533 million was diverted for personal use.

“GLAS Trust's sworn statements that it 'does not know' where the money went are simply false. A review of information in the possession of GLAS Trust since at least April 2025 clearly demonstrates that the monies lent to Alpha (and sent by OCI to companies owned by Byju Raveendran) were indeed invested in Think & Learn in compliance with all relevant Indian laws and not ‘siphoned off’ to the founders,” the statement said.

It added that evidence obtained by GLAS Trust’s own lawyers in separate proceedings, and later accessed by Raveendran’s team, shows that the lenders and Resolution Professional “had full visibility into the use of the funds from the Alpha Loan guaranteed by TLPL.”

The statement further said, “In addition, the financial records of TLPL available publicly verify that Byju Raveendran and entities controlled by him invested in excess of USD 475 million by purchasing shares in TLPL in the same period.”

The founders plan to include this evidence in a full appeal against the amended Delaware judgment and in the planned USD 2.5 billion claim. They also intend to present the same documents before Indian courts.