Byju’s Employees Fear as Court Fails to Halt Insolvency
Byju’s insolvency case is now threatening to unsettle India’s tech startup sector. Reuters reported that thousands of panic-stricken employees are now seeking to protect their careers and recover their dues due to the case.
Byju’s was once India’s largest startup with a market valuation of $22 billion. The startup had attracted global investors and gained popularity for providing online courses during the Covid-19 pandemic. However, it’s now caught up in a dispute with US investors seeking $1 billion in unpaid dues.
A Troubled Past
Byju’s insolvency story started earlier this year. In July, the startup faced insolvency for failing to pay its board dues amounting to $19 million. In recent years, the edtech startup has suffered many setbacks, including boardroom exits and a tussle with investors.
The Board of Control for Cricket in India filed a complaint with the India Companies Tribunal. The tribunal ruling commenced Byju’s bankruptcy proceedings which included the appointment of an interim resolution professional to oversee the management of the company after the board of directors was suspended.
Byju’s investors have accused the startup founder and CEO, Byju Raveendran, of lapses in corporate governance, collapse in valuation, and job cuts. Byju’s is battling the insolvency case as it seeks to regain control. In the papers filed in court, the company warned of a total shutdown as the insolvency case continues.
Last week, India’s Supreme Court declined Byju’s request to stop the insolvency process.
Employee Fears
Byju’s insolvency case affected many parents and employees. A review of WhatsApp chats and interviews by Reuters revealed growing desperation as affected people plan to take action against the edtech company, whose assets have been frozen.
“A lot of people, including myself, have stopped taking classes because there’s no point doing charity for the company anymore,” Byju’s employee, Sukirti Mishra said.
Mishra taught mathematics at Byju’s and was earning $1200 each month. After halting classes, she faces anger from parents whose children she taught on the edtech platform. Having gone unpaid for months now, she struggles to pay medical bills and make loan repayments.
Byju’s 27000 employees have not been paid for three months. Most of them are considering suing the company and protesting on the streets.
About 3000 employees have filed salary claims and provided bank statements since the tribunal appointed an interim resolution professional. Through an internal memo released this week, Raveendran sought to array employees.
“Our company is on the verge of reversing the negative business cycle that began two years ago, showing clear signs of recovery. I guarantee this: When we regain control, your salaries will be paid promptly,” he said.
Tough Road Ahead
But the road ahead could be long and tough for Byju’s employees as it could take months to liquidate company assets or get a new buyer. There are no legal guarantees that the workers will ultimately recover their dues.
An estimated 280 workers have asked a state grievance panel to take action on their unpaid salaries. In a letter dated August 5, the employees accused Byju’s of failing to remit taxes deducted from their salaries to the government.
“We are deeply concerned about the company’s financial stability, our fear is that the company may be planning to shut down operations without settling our dues,” the employees wrote.
Byju’s customers fear that they’ll not be able to recover their money. The edtech startup has a 150 million student membership across 21 countries. Its programs cost between $100 and $300, with the majority being sold on loans.
Byju’s insolvency is set to be the largest in India’s tech startup landscape. Over the years, the industry has attracted investors such as Tiger Global and SoftBank.
