Lawyers representing the embattled edtech giant Byju's assured the National Company Law Tribunal (NCLT) on December 22 that the company is in good health and functioning effectively. Responding to queries during the hearing of the Board of Control of Cricket in India (BCCI) insolvency plea against Byju's, the legal team highlighted the pervasive negative media coverage, asserting that the company's actual performance is overshadowed by misleading reports.
High-Profile Case Adjourned to January 17
Deeming the BCCI insolvency plea against Byju's a 'high-profile' case, the NCLT expressed urgency, adjourning the hearing to January 17 for prompt resolution. Byju's, in response, stated that it has preliminary objections to BCCI's plea and has been granted additional time to file a detailed response.
The dispute revolves around BCCI's request to initiate Insolvency and Bankruptcy Code (IBC) proceedings against Byju's for alleged unpaid dues of Rs. 158 crore under their Indian cricket team sponsorship contract.
Casefile: The Prolonged Dispute
The case, initiated by BCCI on September 8, saw its first hearing on November 28, prompting the NCLT to issue a notice to Byju's. BCCI alleges a default payment of Rs 158 crore by Byju's, as indicated by information. Byju's, which previously held significant branding partnerships with BCCI, ICC, and FIFA, all expiring in 2023, confirmed earlier in the year that it would not renew any of them, leaving the nature of the current legal dispute undisclosed.
Byju's Challenges BCCI's Plea
Byju's intends to contest BCCI's plea, asserting that its business is robust and any concerns stem from negative media coverage. The company has requested additional time to prepare a detailed response, contending that the issue is not a simple case of unpaid dues but a complex payment dispute. However, BCCI maintains that the only complication is the non-payment of dues.
Multiple Challenges for Byju's
This legal battle is just one of the challenges facing Byju's, as it grapples with a show cause notice from the Enforcement Directorate and criticism for delaying settlements to laid-off employees. The Bengaluru-based company previously postponed the payment date from September to November and opted not to renew branding partnerships with BCCI, ICC, and FIFA to cut costs and achieve profitability.
Prosus Marking Down Byju's Valuation Again
In a significant blow to Byju's, tech investor Prosus recently downgraded the valuation of the edtech giant. This marks the third time in a year that Prosus had slashed the value of its stake in Byju's, resulting in a company valuation of less than USD 3 billion. This downgrade represented an alarming 86 percent decline from the previous funding round valuation of USD 22 billion.
This downward spiral began in November of the previous year when Prosus first cut Byju's fair value to USD 5.97 billion. Subsequent downgrades followed in June, with the fair value dropping to USD 5.1 billion. Now, with the valuation dipping below USD 3 billion, Byju's faces heightened scrutiny and challenges in the ever-evolving landscape of edtech.
Board Exits, Layoffs, and Other Challenges
Byju's has been grappling with a series of challenges, including board exits, layoffs, and delayed financial settlements for laid-off employees. In July, Prosus' representative on Byju's board, Russell Dreisenstock, stepped down, citing poor reporting and governance structures. This departure was accompanied by exits from other notable board members, including Vivian Wu from Chan Zuckerberg Initiative and GV Ravishankar from Peak XV Partners (Sequoia Capital India).
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