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A lawsuit filed in a Delaware federal court accuses troubled edtech firm BYJU’S of unlawfully moving funds from its US units, according to a media report.

The lawsuit alleges that funds intended for creditor payments were diverted to Whitehat Education Technology, reported Bloomberg. Between September 26 and October 7, money from the affiliates’ Stripe account was transferred to a Wells Fargo account connected to Whitehat, it added.

Court-appointed trustee Claudia Springer, a bankruptcy attorney, is seeking the return of around $700,000, claiming the transfers occurred from accounts under her supervision, the report said. It also stated that Springer accused individuals using BYJU’S-related email addresses in India of attempting to access the US affiliates’ accounts.

Springer has requested the court to block Wells Fargo from permitting any further transfers from Whitehat’s account.

The legal dispute is part of a broader conflict between BYJU’S and its lenders, who claim the edtech company owes over $1.2 billion. The lenders say they have spent more than a year trying to trace the $533 million they allege the company has concealed.

The dispute originated from BYJU’S Alpha, a unit established to access US capital markets, which once controlled the $533 million, which creditors seized and placed under Chapter 11 bankruptcy. 

Following BYJU’S default, lenders took control of BYJU’S Alpha and are now suing the company to reclaim the funds they believe are owed to them.

Three additional units of BYJU’S—Epic, Tynker and Osmo—were also forced into insolvency and are now overseen by Springer. 

All US affiliates are presently undergoing bankruptcy proceedings in Wilmington, Delaware, while BYJU’S is involved in separate bankruptcy cases in India.