Byju's will shutdown completely if insolvency proceeds, says Byju's Raveendran: Report
New Delhi: Insolvency proceedings against Byju's, once India’s largest startup with a valuation of $22 billion, could lead to mass employee layoffs and a complete halt of its services, Reuters reported, citing a court filing by its CEO.
The ed-tech giant, backed by investors like Prosus and General Atlantic, has faced numerous challenges recently, including layoffs, a significant drop in valuation, and disputes with investors who have accused CEO Byju Raveendran of corporate governance issues, which Byju's has denied.
The company is now confronting a severe crisis after a tribunal initiated insolvency proceedings this week due to a $19 million unpaid sponsorship deal with the Indian cricket board.
Byju's assets have been frozen, and its board has been suspended.
The 452-page filing submitted to the Karnataka High Court by Raveendran’s lawyer MZM Legal, although not publicly available, has been reviewed by Reuters and outlines the potential impact on the company for the first time.
The court is scheduled to hear the case on Monday.
The insolvency process will likely cause vendors who provide critical services to Byju's for the upkeep of online platforms to declare a default, "leading to a total shutdown of services" and bringing the operation to "a grinding halt," Raveendran said in a court appeal seeking to quash the insolvency process, according to the Reuters report.
The filing indicates that the insolvency proceedings may force many employees to leave the company, although Raveendran has expressed willingness to settle the outstanding payment within 90 days.
Byju's, which operates in over 21 countries and gained popularity during the COVID-19 pandemic by providing online courses and in-person coaching classes, has around 27,000 employees, including 16,000 teachers.
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