Byju's faces total shutdown: Insolvency proceedings put 27,000 employees' jobs at risk
Byju's, once India's largest startup valued at $22 billion and backed by major investors like Prosus and General Atlantic, is now on the brink of a major crisis. The company is facing insolvency proceedings that could lead to a mass exodus of employees and a complete shutdown of its services, according to CEO Byju Raveendran.
A Series of Setbacks
In recent months, Byju's has experienced numerous challenges, including significant job cuts, a sharp decline in its valuation, and conflicts with investors. These investors have accused CEO Byju Raveendran of lapses in corporate governance, further straining the company's stability.
Triggering Event
The current crisis escalated when the National Company Law Tribunal (NCLT) initiated insolvency proceedings following a complaint by the Board of Control for Cricket in India (BCCI). The complaint centers around an outstanding payment of $19 million related to a sponsorship deal.
Potential Shutdown
In a court appeal, Byju Raveendran warned that the insolvency process could lead vendors, who provide essential services for maintaining Byju's online platforms, to declare a default. This, in turn, could cause a complete shutdown of services and bring operations to a standstill. Byju's became particularly popular during the Covid-19 pandemic, offering online courses across more than 21 countries.
Impact on Employees
Raveendran emphasized that the insolvency proceedings could severely impact Byju's workforce, which comprises around 27,000 employees, including 16,000 teachers. He stated that employees would suffer and may be forced to leave the organization if the situation is not resolved. To mitigate the crisis, Byju's has expressed willingness to pay the outstanding dues to the Indian cricket board within 90 days.
Looking Ahead
As Byju's navigates this challenging period, the potential shutdown poses significant risks to its operations and employees. The company's future now hinges on the resolution of its financial obligations and the outcome of the insolvency proceedings.
