Byjus News : Byju’s in Turmoil – Investor Allegations, Salary Delays, and Legal Battles
Byju’s, an education company that’s been in trouble lately, is accused of wrongdoing by some of its foreign investors regarding how they handled a recent fundraising effort. The court hearing on this issue has been postponed until June 6th.
Several investors in Byju’s, a struggling education tech company, are accusing the company of misusing funds raised through a recent rights issue. These investors, which include big names like Peak XV Partners and Chan-Zuckerberg Initiative, claim Byju’s defied a court order from the National Company Law Tribunal (NCLT) regarding the use of the funds. They’ve filed a formal complaint alleging oppression and mismanagement by Byju’s. The court case has been postponed until June 6th.
In addition to misusing the funds, the investors are alleging that Byju’s didn’t even follow the court order in the first place. They claim Byju’s failed to deposit the money raised through the rights issue into a secure, neutral account (escrow account) before February 27th, as mandated by the National Company Law Tribunal.
Byjus News : On top of misuse of funds and failing to deposit them in escrow, the investors also claim Byju’s issued shares to participants in the rights issue. This allegedly contradicts a National Company Law Tribunal order requiring Byju’s to maintain the existing ownership structure (shareholding status quo).
Byju’s is contesting the accusations. They insist their actions followed legal procedures and have denied any wrongdoing.
The court (tribunal) is currently on hold waiting for the investors to formally submit their complaint (application or affidavit). This official filing allows the court to acknowledge the allegations. The investors have a week to do this, and Byju’s will have two weeks after that to respond to the claims.
Byju’s raised $200 million by issuing new shares to existing investors (rights issue). But some investors weren’t happy and took Byju’s and the founders to court (NCLT). Their concern is that this fundraising method might alter who owns what percentage of the company (shareholding pattern).
Byju’s parent company, Think and Learn, has been struggling to meet payroll obligations. Employees received partial payments for March salaries, ranging from 50% to 100%, with priority given to lower pay grades. To partially cover these expenses, Byju’s CEO, Byju Raveendran, reportedly took out personal loans. The total cost of these partial payouts is estimated to be between ₹25-30 crore.