The insolvency of Byju’s, a prominent Indian education technology firm once valued at $22 billion, is set to become one of the most significant disruptions in the tech startup sector.
The company, which gained fame by providing online educational courses during the COVID-19 pandemic, is now grappling with a severe financial crisis and a contentious dispute with U.S. lenders over $1 billion in unpaid debts.
A recent survey of Byju’s employees and parents of students, coupled with a review of WhatsApp conversations, reveals a growing sense of urgency and frustration. As the company battles insolvency proceedings, its board is suspended, and its assets are frozen, leaving thousands of employees in a state of financial uncertainty.
Sukirti Mishra, a former math instructor at Byju’s subsidiary WhiteHat Jr., exemplifies the plight of many. Once earning $1,200 a month, Mishra has had to cease teaching due to unpaid wages and mounting personal financial pressures, including medical bills and loan repayments. Her situation has sparked frustration among parents who are now left without the promised educational services.
Byju’s is currently contesting the insolvency proceedings in court, aiming to regain control of its operations. The company has warned that if the insolvency process continues, it may result in a complete shutdown of its services.
Despite these assurances, India’s Supreme Court recently declined Byju’s request to halt the insolvency process, which remains active due to ongoing legal disputes with U.S. lenders.
The financial strain is acutely felt among Byju’s 27,000 employees. With many having gone unpaid for months, there is growing talk of street protests and legal actions. Approximately 3,000 employees have already filed claims with a court-appointed officer, presenting bank statements as proof of their grievances.
In an internal memo, Byju’s founder and former billionaire Byju Raveendran promised employees that salaries would be paid promptly once the company regains control. However, the path to financial recovery could be lengthy, with potential asset liquidation or a protracted search for a new buyer.
Byju’s, which launched in 2011, has recently faced multiple setbacks, including boardroom exits, delayed financial disclosures, and an auditor resignation. Investors, such as Dutch technology investor Prosus, have accused Raveendran of mismanagement, although he has denied any wrongdoing.
The insolvency of Byju’s is poised to be the largest among India’s tech startups, a sector that has attracted significant investment from firms like SoftBank and Tiger Global. Around 280 employees have filed complaints with a state grievance panel, alleging that the company failed to remit taxes deducted from their salaries to the government.
Affected employees and parents have formed WhatsApp groups with over 2,200 members, discussing strategies to recover their funds. They are contemplating social media campaigns, street protests, or legal action to press their claims. Some parents are even considering tagging former Byju’s brand ambassadors, such as Argentine soccer star Lionel Messi, in social media posts to draw attention to their plight.
Despite the turmoil, Raveendran remains optimistic. In a recent memo, he expressed confidence that Byju’s is on the brink of reversing its negative business cycle and showing signs of recovery. However, the future remains uncertain as the company navigates through one of the most challenging periods in its history.
