All is not well for the company which once was leading the country’s startup scene!
India’s leading edtech company, Byju’s, is encircled with multitude of challenges that threaten its financial stability and reputation.
The company is not just embroiled in legal battles with creditors, investors but also its former employees.
Byju’s in Hot Water
With an over unpaid due of Rs 13 crore, the smartphone giant Oppo has filed a petition with the National Company Law Tribunal (NCLT) seeking to declare Byju’s insolvent. Another in the list with same intent is the iEnergizer, which has also filed an insolvency plea against Byju’s.
On top of this, NCLT has restricted Byju’s from issuing shares and utilizing funds raised from a recent rights issue until the insolvency matters are resolved.
This restriction has trickled down to employees since their salary payments have been delayed.
Can Byju’s Weather the Storm? Investor Trust Eroded Amid Financial Struggles
Alleging mismanagement and a low valuation compared to the company’s peak, four major investors, including Prosus and Sequoia India, challenged Byju’s rights issue.
As per the NCLT order, the company been blocked from utilizing funds raised through the rights issue, further straining their cash flow.
Amid all this, the former disgruntled employees are also reportedly planning to file a petition with the NCLT seeking the recovery of their unpaid dues.
A director of Byju’s parent company faces financial penalties in the US for failing to locate $533 million, which disgruntled lenders claim is rightfully theirs.
In nutshell, the company is in deep distress and caught on wrong side of the storm and in order to regain the trust of investors, creditors, and employees, the company needs to address these issues swiftly and transparently.
