Trisha Ghosh, Pune
Edtech giant Byju’s is unable to pay its employees their due salaries as it is left stuck in a legal dispute with investors. Investors have blocked the funds raised by the company from a rights issue by demanding they be locked in a separate account. On March 2, Byju Raveendran, the CEO and founder of the company, made elaborate statements explaining the issue, citing his concerns and regrets on the same.
Byju’s has recently been facing problems arising from inadequate capital. Now, despite the availability of adequate funds to resolve issues of liabilities, the funds raised are being warded off. Mr. Raveendran has informed Byju’s employees of the hindrance the dispute has posed to their salaries. He has openly criticized the company’s investors for causing the delay and uncertainty. “At their behest, the amount raised through the rights issue is currently locked in a separate account”, he said in reference to the same.
Four major investors in Byjus are Peak XV Partners, Sofina, Prosus, and General Atlantic. These firms have appealed to the National Company Law Tribunal (NCLT). This has been done as the four investors have made serious allegations against Byju’s of drawing out $533 million in a U.S. hedge fund. The NCLT in turn sent Byju’s an interim order earlier this week on Tuesday demanding the company keep the funds in a separate account until the matter is further resolved.
Furthermore, as many as six investors have asked for a general meeting to dispute various issues with the company. These include alleged mismanagement, which may or may not refer to previous issues faced by the company, such as a US lawsuit over the repayment of a loan and an auditor’s resignation. According to sources in contact with the investors, approximately 60% of stakeholders voted for the ousting of the current management team, a change of members of the Board of Directors, and a thorough investigation into the firm’s previous acquisitions by a third party. Byju’s has retaliated, stating that voting performed in the absence of the founders themselves is rendered invalid.
Mr. Raveendran has severely lamented the insensitivity of the investors towards employees’ rights and livelihoods. He has stated that many of these stakeholders have made immense amounts of profit. At present, a hearing on the matter of the funds raised by the rights issue has been scheduled for April 4.
Byju’s, one of India’s most successful startups, continues to face major issues with its capital and finances. However, as of now, in his letter to the employees, Mr. Raveendran has stated that he is continually trying to ensure that they receive their deserved salaries by March 10.