Byju's Crisis Deepens: 20,000+ Employees Await February Salaries as Founder Points Fingers at Four Investors
Byju's, the prominent Edtech company, finds itself in a challenging situation as it announces a delay in February salaries for over 20,000 employees. The delay is attributed to legal actions taken by four investors who approached the National Company Law Tribunal (NCLT) against the company.
The NCLT's directive to Byju's, instructing them to keep funds from the rights issue in a separate secured account, has hindered the company's ability to utilize these funds for salary payments.
Assuring employees, Byju's has stated that salaries will be disbursed by March 10. However, this delay adds to the ongoing struggles faced by the company in meeting its payroll obligations over the past couple of months. The company had previously informed employees of plans to raise funds through a $200 million rights issue to address financial challenges.
In a letter addressed to the employees, Byju Raveendran, the founder and CEO, expressed regret over the situation. Despite successfully closing the rights issue, the company remains unable to process salaries due to actions taken by a minority of investors. Raveendran highlighted the insensitivity of these investors, noting that some had profited substantially from their investments while jeopardizing the livelihoods of employees.
The legal proceedings initiated by the four investors—Peak XV Partners, General Atlantic, Prosus, and Sofina—sought to halt the rights issue. The NCLT's intervention mandated Byju's to convene an extraordinary general meeting (EGM) to secure shareholder approval before proceeding with the rights issue.
Byju's provided assurance to the court that proceeds from the rights issue would not be utilized until authorization was obtained as per the court's directives. This development underscores the complexities faced by Byju's in navigating legal challenges while striving to meet its operational commitments, particularly regarding employee salaries.