BYJU’S Stuck In Bankruptcy Limbo
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Dear reader,?
Even as the tubelights go off one by one, BYJU’S founder and CEO Byju Raveendran continues to fight the fight and delay what looks like the inevitable. The latest weapon in his arsenal is an anonymous whistleblower claiming a huge conspiracy at EY against the crumbling edtech giant.?
While Inc42 could not get EY or Byju Raveendran to officially comment on the allegations, the company is still stuck in limbo. With cases in the US and India looking like they might fall against BYJU’S, there’s also a serious possibility of an official dissolution of the company.?
Here’s how BYJU’S is stuck in a limbo and with nowhere to go. But first, a look at the top stories from our newsroom:?
BYJU’S In A Loop
There seems to be no end to the twists and turns in the BYJU’S saga. Now, the troubled edtech’s founder and CEO Byju Raveendran has raised questions over the ongoing insolvency proceedings against the company.
In a LinkedIn post, Raveendran alleged that he has documents that show “conclusive evidence of criminal collusion” between EY India, the lenders and Pankaj Srivastava (IRP). While he did not divulge any further details, he called for a government probe into the matter.
In fact, training his guns at Srivastava, Raveendran said that he was appointed by an Indian court to protect BYJU’S but “ended up destroying it”.
Curiously, this follows a viral post online by a whistleblower, alleging that Srivastava had hired EY India to advise on the insolvency proceedings even though the audit firm had a conflict of interest, as it has been working alongside the lenders of BYJU’S on a related matter.
Meanwhile, Raveendran is likely in for a rocky ride as the NCLT, which is hearing the insolvency case against BYJU’S, has appointed Shailendra Ajmera, also an EY India executive, as the new RP of the troubled company.
On top of this, lenders are now part of its committee of creditors and are looking to extract whatever remains of the once poster child of India’s edtech revolution.
In addition, a US bankruptcy court has ruled in favour of the creditors in connection with the fraudulent transfer of $533 Mn out of the $1.2 Bn term loan B — more on this next.?
It’s a pattern of blame and allegations that has brought down the once highest valued startup in India.?
The Bigger Blow In The US
Curiously, just hours before the allegations broke out, a ruling made by the United States Bankruptcy Court in Delaware, said BYJU'S is responsible for orchestrating and executing an unlawful scheme that defrauded the investors through the wrongful transfer of money.
In its order, the court named BYJU'S parent company Think & Learn Private Limited, director Riju Ravindran (brother of CEO Byju Raveendran), BYJU'S Alpha and Camshaft Capital as responsible to the wrongful transfer and will rule on damages in the matter.?
“We are gratified the Court unequivocally recognized that Riju Ravindran, Camshaft, and BYJU’s together conducted a deliberate fraud on a global scale arising from the theft of $533 million. This is a significant step forward in the Lenders’ efforts to recover the stolen funds that are rightfully owed to them,” according to a statement from the BYJU’S creditors, collectively known as Glas Trust.?
Glas Trust, incidentally is at the heart of the allegations levelled at EY in terms of collusion and conflict of interest and trying to manipulate India’s insolvency laws.?
The US ruling is very likely to be a factor in India, as thus far the company believed that Glas Trust could not be part of the India bankruptcy hearings because of this US lawsuit. Since that is close to winding down, the insolvency proceedings against BYJU’S is also likely to wind down soon, according to a IBC law expert based in Bengaluru
Earlier in March, the BYJU’S committee of creditors proposed the appointment of Shailendra Ajmera, a partner at EY, as the new interim resolution professional. Ajmera is now responsible for handling the financial restructuring of BYJU'S, engaging with creditors and drafting a plan to either revive or liquidate the company.
His appointment has also been targetted in the latest allegations against EY’s tampering with the process and back-channeling of the insolvency process.?
Byju Raveendran’s Fight Goes On
?“From now on, you will hear it directly from me. Because direct action is how we built BYJU’S. Those who believe in me make me strong. Those who do not, make me stronger. As they say, you can never defeat someone who does not give up. To all BYJUites, past and present, I have just one message: stay strong, stay proud. Forgive me for my mistakes. We will be back stronger than ever before,” Raveendran exclaimed on LinkedIn.?
But it’s not clear how exactly the company might be making a comeback. The business is in disarray. Raveendran himself has not been in India for the past 18-24 months. Sources told us earlier that the CEO has not stepped back into India since leaving it at the end of 2023, much before BYJU’S came crumbling down.?
Calling it a shell of its former self might just be an exaggeration.?
Raveendran calls for forgiveness, but there is real money at stake here. He urges employees to stick with him despite no pay or incentive in the offing. There’s no business at BYJU’S any more.?
The shutters are down on the offline learning centres, plus the two acquisitions have both separated themselves from the management. As we reported in our coverage of Great Learning earlier this year, perhaps staying away from the BYJU’S leadership and management saved the skill development startup. Even if it meant the founders settled for a lower amount during acquisition.?
Today, Great Learning is able to eye profits and a future away from the shadow of BYJU’S. The edtech giant is stuck in purgatory.?
And while it’s there, Raveendran is milking every glimmer of hope to claim a comeback is on the cards. What exactly is BYJU’S coming back to??
Sunday Roundup: Startup Funding, Deals & More
That’s all for this Sunday’s Weekly Brief.?
We’ll be back next week with another roundup and a sharp take on what’s happening in the startup ecosystem.?
Till then,
Nikhil Subramaniam
Solution Engineering@ PURVIEW | Application/AWS Architect | Strategist | Developer| Building modern micro services with Java and AWS | Low latency APIs Development| Project ownership| Stakeholder collaboration
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