In answer to a request from India’s cricket board, an Indian tribunal court started the insolvency process for Byju’s on Tuesday. Byju’s was once India’s most valuable startup. The decision essentially puts in place an interim resolution professional who will run the business, kicking out the founder of the startup.
The Board of Control for Cricket in India (BCCI) asked the National Company Law Tribunal (PDF) to make a decision. The BCCI wants to get back almost $19 million from the Bengauluru-based edtech company. The Indian cricket team used to be supported by Byju’s.
Creditors, employees, and vendors have been asked by the tribunal to make claims against the troubled company. The court said, “It is clearly established that there is a debt and that payment has not been made.”
Byju’s can file an appeal, and the company has said it wants to “reach a friendly settlement with BCCI.” A representative for Byju’s also said, “For now, our lawyers are looking over the order and will do what they need to do to protect the company’s interests.”
Because of the court decision, Byju’s has been through a lot of trouble over the past two years. It became clear that the company was having problems when it missed dates for financial reports two years ago and made more than 50% less money than expected.
Top investors in the edtech company, such as Prosus and Peak XV, say it has problems with its governance. In a separate court battle, the investor group is also trying to get rid of Byju’s founder, Byju Raveendran. Last year, the startup’s board members and inspector quit in protest.
The fight between the investors, which includes Sofina and the Chan Zuckerberg Initiative, got worse earlier this year when Byju’s lowered the value of the company to just $25 million in order to raise money through a rights issue.
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Byju’s couldn’t go ahead with its second rights issue because of a recent court order. BlackRock, which has a small stake in Byju’s, has also written down the value of its holding to zero.
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