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March 11, 2024

Byju’s Grapples with Salary Delays Amidst Investor Disputes: Rights Issue Funds to the Rescue

Amidst a backdrop of financial turbulence and legal entanglements, Byju’s, the prominent edtech giant, finds itself entangled in a web of challenges, marked by delayed salaries and investor disputes. According to a recent report by Moneycontrol, Byju’s has disclosed that it disbursed part salaries for February, with assurances that the remainder will be settled imminently, leveraging funds from a contentious rights issue.

The crux of the issue lies in Byju’s ongoing clash with investors, notably Prosus, over the utilization of proceeds from a substantial rights issue. This discord culminated in the funds, amounting to $200 million, being ensconced in an escrow account, impeding their immediate deployment for operational necessities.

However, buoyed by optimism, Byju’s anticipates gaining access to these funds in the near term, facilitating the fulfillment of outstanding salary commitments for February.

In an earnest attempt to assuage concerns, Byju’s has diligently communicated with its workforce, elucidating the prevailing circumstances and extending apologies for the delays. Reassurances abound that once the rights issue funds become available, the remaining portions of February salaries will promptly find their way into employee accounts. Moreover, attributing the delays to banking intricacies exacerbated by an extended weekend, Byju’s has pledged swift resolution, promising salary reflections by the ensuing Monday.

Beyond the financial conundrum, Byju’s finds itself embroiled in legal skirmishes, with battles waged in forums like the National Company Law Tribunal (NCLT) and the Karnataka High Court. The recent extraordinary general meeting (EGM), orchestrated by a consortium of investors aiming to overhaul leadership, underscored the simmering tensions. The resolution sought to unseat founder Byju Raveendran, alongside Divya Gokulnath and Riju Raveendran from their board positions.

In a staunch rebuttal, Raveendran rebuffed the legitimacy of the resolutions passed at the EGM, vowing to maintain his role as CEO. Meanwhile, the Karnataka High Court’s decree casts a shadow of uncertainty, stipulating that until a definitive verdict is rendered, the resolutions emanating from the contentious meeting hold no sway.

The saga unfolding at Byju’s serves as a testament to the complexities inherent in navigating the terrain of corporate governance amidst financial exigencies and shareholder discord. As the edtech behemoth grapples with multifaceted challenges, the resolution of these conflicts will undoubtedly shape its trajectory and resilience in the ever-evolving landscape of digital education.

Jhumpa Lahiri

Jhumpa Lahiri

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