Code.org Sues BYJU’S Subsidiary WhiteHat Jr In The US Over Pending Licence Fees

In another trouble for edtech giant BYJU’S, Code.org, a non-profit organisation in the United States, has filed a lawsuit against the edtech decacorn’s subsidiary WhiteHat Jr in the California district court for not paying required fees while continuing to use its platform.

WhiteHat Jr entered into a partnership with Code.org in 2022 under which the former committed to paying $4 Mn over a four-year period to licence the latter’s coding education platform, Techcrunch reported.

However, Code.org, in the lawsuit filed this month, has alleged that WhiteHat Jr failed to adhere to the agreed-upon payment schedule while still utilising its coding courseware, the report said. 

It is important to note that BYJU’S acquired WhitHat Jr for $300 Mn in 2020. 

BYJU’S was not immediately available to respond to the development. The story will be updated on receiving a response from the Byju Raveendran-led startup.

According to the report, Code.org has alleged that WhiteHat Jr paid the fee for 2022 but informed the former earlier this year that it would not be able to make the remaining payments under the deal.

Code.org has alleged that WhiteHat Jr sought an amendment to the original agreement to rearrange the outstanding licence fee payments. Code.org’s legal team contends that the initial contract explicitly states that, even in the case of termination, WhiteHat Jr remains obligated to fulfil all future licensing payments that are still due.

“To this day, Whitehat has failed to pay either the Q1 2023 invoice or the Q2 2023 invoice. In fact, despite repeated written and oral requests by Code.org for payment, Whitehat has not paid anything at all beyond the $1,000,000 that it paid pursuant to the 2022 invoices before the Agreement was amended,” Code.org lawyers alleged, as per the report. 

It must be noted that after the release of BYJU’S consolidated financial statements for FY21, Raveendran had called WhiteHat Jr the “under-performer”. Later, the startup rebranded WhiteHat Jr as ‘BYJU’S Future School’.

The latest development comes at a time when BYJU’S is fighting fire on multiple fronts. The startup has been grappling with a series of challenges, including a legal dispute with lenders over a $1.2 Bn Term Loan B, financial constraints, cash burn, layoffs, high-profile leadership departures, auditor resignations, and scrutiny from the Enforcement Directorate for alleged FEMA violations.

At its annual general meeting (AGM) last week, stakeholders gave their nod to the company’s much-delayed financial statements for FY22.

Before that, the startup had disclosed selective numbers of its standalone operations in FY22. It said that its parent Think and Learn Private Ltd reported a standalone EBITDA loss of INR 2,253 Cr in FY22 as against INR 2,406 Cr in FY21.

Meanwhile, Raveendran has reportedly asked BYJU’S investors to infuse $300 Mn in the company to increase their stake following their demand to revamp the board so that they can have a bigger say in the company’s operations.