Anika Begay
India’s top court has stayed a court ruling that blocked Byju’s insolvency proceedings, a victory for U.S. creditors seeking to recover $1 billion from the once-celebrated edtech startup.
India’s Supreme Court on Wednesday ordered a stay on the National Company Law Appellate Tribunal’s recent approval of a settlement between the Indian Cricket Board BCCI, which had halted its insolvency proceedings. The Supreme Court order means the proceedings will now resume.
Wednesday’s ruling is the latest in a series of crises for cash-strapped Byju’s, once India’s most valuable startup, with a valuation of $22 billion.
The startup’s troubles began a couple of years ago, but worsened last month after an Indian court initiated insolvency proceedings after the company failed to pay more than $19 million owed to the BCCI, which wields significant influence in India as the official body that oversees cricket, the country’s most popular sport.
Byju’s avoided the proceedings when the CEO’s brother, Riju Raveendran, agreed to pay BCCI. An appellate court then dismissed the insolvency case.
US-based Glas Trust, which represents some creditors of a Byju’s group company, had challenged the court’s decision, arguing that Riju Raveendran had used the creditor’s capital to pay BCCI.
Between 2020 and 2021, Byju’s raised more than $2.5 billion, including a $1.2 billion Term B loan from a group of U.S. lenders. The startup attempted to go public in early 2022 at a valuation of more than $40 billion, but abruptly shelved those plans after Russia’s invasion of Ukraine sent global markets into a tailspin.
Byju’s did not immediately respond to requests for comment.
The startup has been battling fires on nearly every front over the past two years. Its problems were compounded when it missed financial reporting deadlines and fell short of revenue projections by more than 50% in 2022.
Major investors, including Prosus and Peak XV, have alleged governance issues at the education technology company and even filed a lawsuit to remove founder Byju Raveendran and gain control of the company, which has raised more than $5 billion in equity and debt.
Last year, the startup’s board of directors and auditor suddenly resigned in protest.
The conflict escalated when Byju’s slashed its valuation to $25 million and attempted to raise funds through a rights issue, prompting backlash from investors including Prosus, Peak XV, Sofina and Chan Zuckerberg Initiative. It was ordered not to use the capital raised in the rights issue and was barred from attempting to raise a second rights issue.
Prosus and BlackRock have written off their stakes in Byju’s.
