U.S. Bankruptcy Judge Orders Arrest of Hedge Fund Manager Linked to Byju’s Scandal

Byju Law Insider

LI Network

Published on: March 15, 2024 at 11:08 IST

A U.S. bankruptcy judge has ordered the arrest of William Cameron Morton, a hedge fund manager allegedly involved in helping Indian education technology startup Byju’s conceal a staggering $533 million from its lenders.

Byju’s Alpha, a subsidiary under Byju’s lenders’ control, filed for U.S. bankruptcy in February following the startup’s default on a massive $1.2 billion debt. Shockingly, during the pursuit of repayment, lenders uncovered that Byju’s had transferred over half a billion dollars to Morton’s hedge fund, Camshaft Capital, as revealed in court filings.

Despite previous court orders summoning Morton to clarify the whereabouts of the funds, his explanations fell short of credibility. Claiming hospitalization abroad, Morton failed to provide substantial proof or his contact details, prompting the judge’s skepticism during a Thursday court session in Wilimington, Delaware.

In response to Morton’s perceived contempt for the court and lack of cooperation, Judge Dorsey issued a warrant for his arrest. Additionally, both Morton and Camshaft face daily fines of $10,000 until they comply with court directives to aid the investigation into the missing funds.

Judge Dorsey remarked, “He certainly has the financial ability to pay those fines… He knows the location of half a billion in the debtors’ funds,” underscoring the gravity of Morton’s involvement.

Efforts to reach Morton for comment were unsuccessful, and an attorney representing Camshaft declined to provide a statement. Byju’s lenders, in a lawsuit against Morton and Camshaft, highlighted the lack of explanation for the substantial fund transfer and questioned Morton’s qualifications to manage a hedge fund, particularly given his young age.

Furthermore, it was revealed that Camshaft’s primary business location, as listed in filings, led to an International House of Pancakes in Miami, raising further suspicions regarding the legitimacy of the operation.

The downfall of Byju’s, once valued at a staggering $22 billion under its former parent company Think & Learn Private Ltd, underscores the severity of the situation, with legal proceedings continuing to unravel the intricacies of this financial scandal.

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