An Indian tribunal court has initiated insolvency proceedings against Byju’s, once a $22 billion edtech startup. The move comes in response to a plea filed by the Board of Control for Cricket in India (BCCI), which seeks to recover nearly $19 million in outstanding dues from the company12.
Key Points from Byju’s going Bankruptcy:
- Background: Byju’s, known for its online learning platform, had previously sponsored the Indian cricket team. However, the startup faced governance issues, missed financial reporting deadlines, and fell short of revenue projections by over 50% in recent years.
- Insolvency Resolution: The National Company Law Tribunal (NCLT) ruling installs an interim resolution professional to manage Byju’s operations, effectively pushing out the startup’s founder. Creditors, employees, and vendors are invited to file claims against the embattled firm.
- Legal Battles: Byju’s investors, including Prosus and Peak XV, have alleged governance problems and are legally fighting for the removal of founder Byju Raveendran. BlackRock, a minority investor, has written down the value of its investment in Byju’s to zero.
- Appeal and Settlement: Byju’s can appeal the NCLT decision and has expressed a desire to reach an amicable settlement with BCCI.
Implications:
The collapse of Byju’s, once a high-flying unicorn, highlights the challenges faced by edtech startups and underscores the importance of financial transparency and governance in the tech industry.
The insolvency proceedings could also impact employees and vendors, who are now being invited to file claims. This situation is a stark reminder of the challenges faced by the edtech sector, which has witnessed a slowdown in recent months.
The company is likely to contest the NCLT’s decision in the National Company Law Appellate Tribunal. However, the company’s future remains uncertain as it grapples with financial woes and legal battles.
