IT Services Co Takes BYJU’S To NCLT; Fourth Insolvency Plea For Edtech Giant

Gurugram-based IT services company Surfer Technology Private Limited has filed a fresh insolvency plea at the National Company Law Tribunal (NCLT) against troubled edtech firm BYJU’S. 

Sources said that Surfer Technology offered IT related services to BYJU’S customer care and sales teams in India. This is in addition to three other insolvency pleas against BYJU’S by cricket body BCCI, the US-based lender group for the $1 Bn Term Loan B and French outsourcing firm Teleperformance.

Surfer Technology’s plea was filed in early January and was registered by the NCLT on February 1, 2024. 

The NCLT registered the plea on the same day as US-based BYJU’S Alpha Inc filed for bankruptcy in Delaware in the US. According to a court filing, BYJU’S Alpha listed its assets in the range of $500 Mn to $1 Bn, with up to 199 creditors. 

It’s been a torrid week for BYJU’S. In an open letter, major shareholders such as Prosus, Lightspeed, General Atlantic, Peak XV Partners, Sofina and others called for a reconstitution of the company board and for an EMG to discuss the proposed $200 Mn rights issue. 

The rights issue which was announced by BYJU’S sometime back is being seen as a last-ditch effort to keep the company afloat amidst mounting losses, financial liabilities and various lawsuits against the edtech major.

Sources told Inc42 that Byju Raveendran is aggressively trying for an urgent cash infusion to pay off debt and retain control of the business. However, investors have questioned the rationale for a significant drop in valuation by 99% for the rights issue. 

There are also concerns about severe stake dilution for shareholders that don’t participate in the rights issue. 

Post this announcement by the company, the investors, have called for an extraordinary general meeting (EGM) to reconstitute the board and change its leadership. Byju Raveendran and his family members — Divya Gokulnath and Riju Raveendran, are currently on company’s board.

The resolutions being put forward for the EGM also include — a request to address the outstanding governance, financial mismanagement and compliance issues.

Post this announcement by the board, Raveendran, in a letter to company’s employees termed the investor group’s action a conspiracy.

“Certain investors, seeing the crisis we faced, saw it as an opportunity to conspire and demand the stepping down of our founder as the group CEO of BYJU’S. We are pained to see this action from a few of the investors who should have supported us in our fight at these challenging times, instead of directly speaking to media. The founders are the largest investors and the greatest fighters for BYJU’S,” the letter said.

Till date, BYJU’S has raised more than $5 Bn from over 80 investors. Group CEO Raveendran, his wife Divya Gokulnath and brother Riju Raveendran together hold about 26% of the company.

“It is a do or die battle for Raveendran. One of the last options left to save the company. It is not ideally what he or the shareholders would have wanted. But if the company shuts down, both Raveendran and investors will be losers on all fronts ,” K Ganesh, serial entrepreneur and promoter of BigBasket, Bluestone, Portea Medical and Homelane told Inc42.

Others in the ecosystem have also raised concerns about the issues damaging the credibility of Indian startups. upGrad cofounder Ronnie Screwvala, for instance said that fixing the BYJU’S situation is critical “for India as an investment destination!”.

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