An Indian tribunal court commenced insolvency proceedings for Byju’s, formerly India’s most valuable startup, following a petition from the nation’s influential cricket board on Tuesday
The business’s activities will now be managed by an interim resolution professional following the Tuesday verdict that forces the once-billionaire founder out. This is a significant change for a corporation valued at $22 billion.
In response to a plea from the Board of Control for Cricket in India (BCCI), which is attempting to recoup about $19 million from the edtech business with its headquarters in Bengauluru, the National Company Law Tribunal issued a decision on Tuesday (PDF). Previously, Byju had sponsored the Indian cricket squad.
The tribunal has invited vendors, employees, and creditors to submit claims against the struggling company. The court declared that “the existence of a debt and a default in the payment of debt is established.”
Byju stated that it wants to “achieve an amicable settlement with BCCI” and may appeal the ruling. “In the interim, our lawyers are reviewing the order and will take necessary steps to protect the company’s interests,” a Byju representative continued.
The court order is issued amid Byju’s worst moments over the previous two years. The company’s problems started two years ago when it missed financial reporting deadlines and exceeded revenue targets by over 50%.
According to accusations made by Prosus and Peak XV, among other key investors, the edtech business is enmeshed in governance concerns. In a separate legal battle, the investment group attempts to remove Byju Raveendran, the company’s founder, from office. Last year, the auditor and board members of the startup quit in protest.
Earlier this year, the conflict between the investor group—which comprises Sofina and the Chan Zuckerberg Initiative—grew more intense when Byju’s lowered the company’s valuation to under $25 million to seek money through a rights issue.
A recent ruling from the court prevented Byju from pursuing its second rights dispute. BlackRock, Byju’s minority investor, recently wrote down its ownership stake to zero.
