Byju’s, the Indian edtech giant that was once hailed as the nation’s most valuable startup, has been jolted by a harsh reality – insolvency proceedings. According to media reports, the National Company Law Tribunal (NCLT) initiated insolvency proceedings against Byju’s parent company, Think and Learn Pvt Ltd, following a petition from the Board of Control for Cricket in India (BCCI).
The catalyst for Byju’s current woes lies in a payment dispute with the Board of Control for Cricket in India (BCCI). The BCCI accused Byju’s of failing to settle a sponsorship debt of approximately $19 million. This claim, filed in September 2023, triggered insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) of India. The NCLT, after reviewing the BCCI’s petition, found merit in their claim. The tribunal noted Byju’s failure to fulfill its financial obligations and greenlit the initiation of insolvency proceedings. This decision effectively ousts Byju’s founder and board of directors from control of the company, placing an interim resolution professional, Pankaj Srivastava, at the helm.
It also initiates a moratorium period, freezing all debts and legal actions against Byju’s as well. And in response to the court’s decision, Byju’s has expressed intentions to seek an “amicable settlement” with BCCI while preparing to challenge the insolvency order through legal avenues. “We wish to reach an amicable settlement with BCCI and we are confident that, despite this order, a settlement can be reached,” a spokesperson for Byju’s revealed in a statement. “In the meantime, our lawyers are reviewing the order and will take necessary steps to protect the company’s interests.”
The BCCI’s claim, though seemingly isolated, comes even as over the past two years, the company has grappled with a series of setbacks that eroded investor confidence and triggered a financial crisis (as is evident in the drop in valuation – once valued at $22 billion, Byju’s valuation has plummeted to less than $3 billion amid successive financial setbacks and legal battles).
For one, the edtech major failed to meet its financial reporting deadlines, raising red flags about its financial health, as well as fell short of its revenue projections. The situation was further worsened when Byju’s CFO and CEO for India resigned, followed by the departure of advisors Rajnish Kumar and T V Mohandas Pai, and Byju’s lost its auditor and three of its board members (Peak XV Partners (previously Sequoia Capital India), Prosus and Chan Zuckerberg Initiative). In addition to this, investment firm Prosus wrote off its entire stake in Byju’s at an earlier point, while the edtech major cut its valuation ask by 99% in a rights issue earlier this year.
