How Byju's US lenders ran into a hedge fund wall

livemint.com:

BENGALURU : Byju’s has shifted the ownership of half a billion dollars that its special purpose vehicle Alpha borrowed in the US to one of its unnamed subsidiaries, a move that has stumped its US lenders trying to retrieve their money. Byju’s, which borrowed $1.2 billion in the US in November 2021, moved $533 million of it to Camshaft Capital Fund, a three-year-old hedge fund.

When Glas Trust Co., the trustee representing 37 lenders, pressed for the whereabouts of this money, the hedge fund disclosed for the first time that Alpha is no longer a limited partner in the fund, it had a zero-balance capital account, and hence the fund cannot meet Byju’s Alpha’s demand for the records. “Byju’s Alpha is a former limited partner of Camshaft Capital Fund, LP, and was never a limited partner of any other Camshaft entity," David Massey, a lawyer representing Camshaft wrote in a letter dated 4 December to Timothy Pohl, the representative appointed by the lenders.

“As such, Byju’s Alpha’s demand for books and records is rejected because Byju’s Alpha has no statutory right or standing to demand books and records from Camshaft Capital Fund, LP (or any other Camshaft entity identified in your letter). Nor does Byju’s Alpha have any rights under the Limited Partnership Agreement between Byju’s Alpha and Camshaft Capital Fund, LP, as a former limited partner with a zero-balance capital account." Mint has seen a copy of Camshaft’s letter to Pohl.

Byju’s set up the special purpose vehicle Alpha, which received $1.2 billion from lenders in 2021. Between April and July 2022, Byju’s Alpha deposited $533 million with Camshaft Capital Fund and Alpha became a limited partner in Camshaft Capital Fund.