New Delhi

Indian entrepreneur Byju Raveendran's software company drained cash from US affiliates violating US bankruptcy regulations, a Delaware lawsuit filed Tuesday alleges.

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Money that should be used to repay creditors was instead made to Whitehat Education Technology based on court documents, said a court-appointed trustee for the affiliates. The bankruptcy attorney Claudia Springer, appointed as the trustee, filed a lawsuit to recover nearly $700,000 transferred out from entities under her control.

The dispute is just a small part of an all-out fight between the beleaguered ed-tech company Byju's and lenders to whom the firm owes more than $1.2 billion. For more than a year, those lenders have been trying to track down $533 million that Byju allegedly hid from them.

A representative for Byju's did not return an email seeking comment.

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A Byju’s affiliate, which had held the missing $533 million, was seized by lenders and filed for Chapter 11 bankruptcy, while three other units were forced into insolvency proceedings and put under the control of Springer. The US-based entities are all in bankruptcy court in Wilmington, Delaware, while Byju’s itself faces bankruptcy proceedings in India.

When a firm enters bankruptcy court protection in the US, especially during the initial stages of a case, funds generally cannot be transferred or settled against bills without permission from a bankruptcy judge. Byju's officials have been accused by their lenders of having breached bankruptcy regulations by transferring $533 million.

Between Sept. 26 and Oct. 7, the US affiliates’ Stripe Inc. account transferred the funds out of the bankrupt companies to a Wells Fargo bank account associated with Whitehat, according to Tuesday’s complaint. Springer alleges that people from India using Byju-related email accounts have been attempting to access the US debtors' account, based on photos of the firms' Stripe account history that are part of the lawsuit.

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Springer has sought a court order preventing Wells Fargo from transferring any funds out of Whitehat’s account.

Stripe and Wells Fargo didn’t immediately return messages seeking comment.

Byju’s faces a fraudulent transfer lawsuit in a US bankruptcy court over those funds. At issue is Byju's Alpha, the shell company Byju's created to gain access to the US capital markets. After Byju's defaulted, lenders assumed control of the shell company and lodged it under court protection, then filed a suit to recover the $533 million they claim should go to them.