With its shareholders now pushing for Byju Raveendran’s exit from the company, ed-tech company Byju’s continues to grapple with a financial crisis. Meanwhile, the overseas lenders of the company are also applying pressure on Byju’s for the missed payments.
Byju’s was once India’s leading online education platforms, valued at $22 billion at its peak. However, due to subdued demand and irregularities in its foreign investments, the company landed in hot water with the law and central agencies.
Now, a US court has ruled in the favour of Byju’s overseas investors who are seeking timely payments, and the shareholders of the company have moved a resolution for the ouster of the founders of Byju’s from top posts.
A unit of Byju’s was also put into bankruptcy on Friday in the US by a court-appointed agent who took over the shell company after it defaulted on $1.2 billion in debt. Byju’s Alpha Inc. doesn’t have enough money to keep fighting with its parent company about the debt, according to court papers filed by the unit’s Chief Executive Officer Timothy Pohl.
Here are the top 5 controversies of ed-tech firm Byju’s
ED raids and FEMA violations
In April 2023, the Enforcement Directorate (ED) conducted raids on three offices of Byju’s in Bengaluru, alleging violations under the Foreign Exchange Management Act (FEMA). The ED slapped a FEMA violation notice on Byju’s worth ₹9,362.35 crore, which initially triggered the downfall of the online education company.
Byju’s vs lenders in US court
One of the biggest point of contempt in Byju’s history has been the $1.2 billion loan from US lenders, taken to enhance the finances of the company. However, lenders have accused Byju’s on not making payments on time, while the ed-tech company filed a lawsuit against one of its lenders, saying that they are putting excessive pressure on for the payback of the loan.
Controversial history of Byju’s US arm
Byju’s faced a lawsuit in the United States after its lenders accused Byju’s Alpha Inc. of concealing $500 million from the lenders, according to Bloomberg. After a court in Delaware ruled in the favour of the lenders, Byju’s Alpha Inc. was put into bankruptcy by the US court. The CEO said that Alpha Inc. doesn’t have enough money to keep fighting with its parent company about the debt.
Mass layoffs, payroll interruptions in Byju’s
Byju’s in June 2023 announced the layoffs of over 1000 employees across several departments including mentoring, logistics, training, sales, post-sales, and finance. 400 more jobs were cut in August after the performance review cycle. However, several employees came forward saying that they haven’t been paid in months, and the dues of the laid off employees has not been cleared.
Byju’s shareholders seek ouster of Byju Raveendran
Around six investors in Think and Learn Private Limited, which operates under BYJU’s brand, have called for an extraordinary general meeting to address issues at the edtech major and oust founders from having control over the firm, reported PTI. The shareholders pushed for the removal of founder Byju Raveendran from the CEO post, increasing tussle in the company.