NCLT issues fresh insolvency notice to BYJU'S: Here's why
The National Company Law Tribunal (NCLT) has served a notice to crisis-ridden BYJU'S, following a plea submitted by US-based GLAS Trust Company. The plea aims to admit BYJU'S into the insolvency resolution process. The edtech company has been instructed to file a response, with the case set for a hearing in April. NCLT's notice to BYJU'S comes a week after founder Byju Raveendran was voted out of the board. The Karnataka HC will decide his ouster on March 13.
BYJU'S Alpha Inc and the $1.2 billion loan
The GLAS Trust represents over 100 lenders who provided loans to BYJU'S US subsidiary, BYJU'S Alpha Inc, which is currently undergoing voluntary bankruptcy proceedings in Delaware. Senior advocate Uday Holla, representing GLAS Trust, stated that Think and Learn, BYJU'S's parent company, had guaranteed the $1.2-billion loan that BYJU'S Alpha took. However, when lenders invoked the guarantee and demanded payment, BYJU'S failed to respond or pay any money.
Other insolvency pleas against BYJU'S
This marks the fourth insolvency plea filed against BYJU'S in under six months. The Board of Control for Cricket in India (BCCI), France-based Teleperformance Business Services, and digital marketing firm Surfer Technologies have also submitted separate insolvency pleas against the company. The NCLT has issued notices for all these petitions. BCCI alleges that BYJU'S owes them over Rs. 150 crore, while Surfer and Teleperformance claim outstanding dues of Rs. 4 crore and Rs. 2.3 crore, respectively.
BYJU'S is battling crises on multiple fronts
There seems to be no respite for BYJU'S, which was once a celebrated Indian edtech giant. The company is having difficulties paying salaries to its employees on time. Its attempts to raise fresh funds have also been contested by investors who clearly exhibit a trust deficit in the company's management. Investigators say there is a lack of transparency in the company's operations and allege a misappropriation of funds. The Enforcement Directorate (ED) has also banned Raveendran from leaving India.