Byju’s Founder Secures Private Debt To Meet Employee Salaries Amid Financial Strains, NLCT Dispute, Says Report

Byju’s, the prominent edtech unicorn, has faced significant challenges in disbursing employee salaries amidst an ongoing dispute with investors. Founder and CEO Byju Raveendran reportedly secured private debt amounting to approximately ₹30 crore to cover March salaries, as financial strains continue to impact the company’s operations. Despite efforts to address the salary delays, the situation remains precarious, with funds from a recent rights issue locked in an escrow account due to the dispute with investors.

Partial Salary Disbursement Amid Financial Strain:

The recent disbursement covers partial salaries for both February and March, with senior-level staff receiving partial payments while teachers and lower-ranking employees received full payment for March. Byju’s, with a substantial workforce of around 15,000 employees, faces a total salary expenditure ranging between ₹40 and ₹50 crore, exacerbating the financial strain faced by the company.

Root Cause: Investor Dispute and Fund Locking:

The delay in salary payments stems from funds raised through a recent rights issue, which have been ensnared in a dispute with investors. The National Company Law Tribunal (NCLT) ordered Byju’s to retain the funds from the rights issue in an escrow account until the investor plea is resolved, further complicating the company’s financial predicament.

Legal Battles and Arbitration Proceedings:

Byju’s investors, including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, have filed a plea challenging the company’s decision to raise funds at a particular valuation, leading to protracted legal battles and arbitration proceedings. The NCLT has given Byju’s a limited timeframe to respond to the investor plea, while the company seeks arbitration to resolve the dispute with its key investors.

Operational Challenges and Negotiations:

In addition to the investor dispute, Byju’s faces operational challenges, including insolvency proceedings initiated by an operational creditor, Teleperformance Business Services. Negotiations aimed at preventing new insolvency proceedings against the company are underway, underscoring the urgency of resolving financial issues and averting further legal complications.

Leadership Stability Amid Turmoil:

Despite mounting challenges, Byju Raveendran received an extended reprieve from the Karnataka High Court, allowing him to continue leading Byju’s amidst a flurry of accusations and countercharges between the company and its investors. The stability of leadership remains crucial as Byju’s navigates through turbulent waters and seeks to address its financial woes.

In conclusion, Byju’s ongoing struggles with salary disbursement underscore the far-reaching implications of its investor dispute and financial challenges. As the company grapples with legal battles, operational hurdles, and regulatory scrutiny, the resolution of the investor dispute and the restoration of financial stability are paramount for Byju’s to safeguard its workforce and sustain its operations in the highly competitive edtech landscape.