Byju’s Insolvency Crisis Stirs Concern Among Employees and Stakeholders
News Mania Desk/Agnibeena Ghosh/22nd August 2024
The insolvency crisis at Byju’s, a prominent Indian ed-tech firm, has sent shockwaves through the startup community, sparking widespread anxiety among its thousands of employees. Once celebrated as a high-flying startup valued at $22 billion in 2022, Byju’s now faces a major financial upheaval amid a bitter dispute with U.S. lenders demanding $1 billion in unpaid dues.
Founded in 2011, Byju’s rose to prominence by offering online educational courses, especially popular during the COVID-19 pandemic. However, the company is now embroiled in a complex insolvency battle that has led to the suspension of its board and the freezing of its assets. This situation has left many employees in a precarious position, struggling with unpaid wages and financial uncertainty.
Interviews with numerous employees and reviews of communications reveal a growing sense of desperation. Sukirti Mishra, a former mathematics teacher with Byju’s unit WhiteHat Jr, described her dire situation. Once earning $1,200 a month, Mishra is now facing significant challenges, including mounting medical bills and loan payments, while also dealing with the fallout from her decision to halt classes due to the company’s financial troubles.
Despite Byju’s attempts to regain control and address the insolvency issue, the company did not respond to queries about the situation. The ongoing court proceedings have led to further unrest among the company’s 27,000 employees, many of whom have not received their salaries for months. As a result, about 3,000 employees have filed claims to recover their dues, backed by bank statements as evidence.
The situation is becoming increasingly critical, with employees considering protests or legal actions to secure their rights. Byju’s founder, Byju Raveendran, has assured staff in an internal memo that salaries will be paid once the company regains stability, but the path to resolution remains uncertain. The process of finding a new buyer or liquidating assets could take months, and there are no guarantees that all employees will recover their owed payments.
The company’s financial troubles have been compounded by internal strife, including boardroom exits, delayed financial disclosures, and an auditor resignation. Accusations of mismanagement have been directed at Raveendran, although he has denied any wrongdoing. The crisis has also prompted a wave of complaints to state grievance panels, with employees alleging that the company has not paid the taxes deducted from their salaries.
Byju’s employees and affected parents are actively organizing to address their grievances. WhatsApp groups with over 2,200 members have been created to strategize on potential actions, including social media campaigns and street protests. Parents, concerned about recovering their payments, have even suggested tagging former Byju’s brand ambassadors, such as soccer star Lionel Messi, on social media to raise awareness of the issue.
As Byju’s struggles to overcome its financial difficulties, Raveendran remains optimistic about the company’s future. 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 road ahead is fraught with challenges, and the resolution of this crisis will be closely watched by the broader startup ecosystem and the thousands of individuals affected by the company’s downfall.
