Byju’s begins salary disbursement after two months delay

Troubled edtech giant Byju's has initiated the disbursement of March salaries, signalling a move towards stabilizing its operations amid a challenging financial period. The company faced delays in salary payments due to a significant cash crunch.

However, It secured an alternative line of credit to facilitate timely salary payments to its employees.

Legal battles and investor disputes

Byju's said that the delay in salary payments was due to legal disputes and disagreements with investors, including prominent names such as Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA.

These investors have challenged Byju's decision to raise $200 million at a significantly reduced post-money valuation, leading to a blockage of funds raised through a rights issue.

Consequently, the National Company Law Tribunal (NCLT) directed Byju's to retain the rights issue funds in an escrow account pending resolution, exacerbating the company's liquidity issues.

It's worth mentioning that the investors held an Extraordinary General Meeting (EGM) in late February to remove founder Byju Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran from leadership positions.

Efforts to resolve conflicts

Amid these challenges, Byju's has sought arbitration to resolve the disputes with its investors over the rights issue. The company is also engaged in legal proceedings, with the Karnataka High Court extending an interim stay on the outcomes of an extraordinary general meeting aimed at ousting Raveendran.

Byju's proposal to allow estranged investors to participate in the rights issue at a 99% discount to the company's peak valuation of $22 billion represents an attempt to reconcile with investors and navigate through its current financial predicament.

The significant fall in valuation 

Byju's, which was once valued at $22 billion, witnessed a dramatic decline in its worth, now estimated at around $250 million. The sharp fall of 99% from its peak valuation has been fueled by regulatory investigations and investor allegations, although the company continues to deny any wrongdoing. 

Laying off employees through phone calls

The startup has also started laying off employees through phone calls without putting them on a Performance Improvement Plan (PIP) or having them serve a notice period. According to reports, the number of employees affected in this round could be between 100 and 500. 

"We are in the final stages of a business restructuring exercise announced in October 2023 to simplify operating structures, reduce the cost base, and improve cash flow management," a company's spokesperson had said.