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An Indian tribunal court initiated insolvency proceedings for Byju’s, once India’s most valuable startup, on Tuesday in response to a petition from the country’s powerful cricket board. The Tuesday ruling installs an interim resolution professional to manage the company’s operations, pushing the once-billionaire founder out in a dramatic turn for a firm that was valued at $22 billion at its peak.
The National Company Law Tribunal’s Tuesday ruling (PDF) came in response to a petition from the Board of Control for Cricket in India (BCCI), which is seeking to recover nearly $19 million from the Bengauluru-headquartered edtech startup. Byju’s had previously sponsored the Indian cricket team.
The tribunal has invited creditors, employees, and vendors to file claims against the embattled firm. “The existence of a debt and a default in the payment of debt is clearly established,” the court stated.
Byju’s can appeal the decision and said it wishes to “reach an amicable settlement with BCCI.” A Byju’s spokesperson added: “In the meantime, our lawyers are reviewing the order and will take necessary steps to protect the company’s interests.”
The court order comes amid a series of crises that have engulfed Byju’s over the past two years. The company’s troubles began to surface when it missed financial reporting deadlines two years ago and fell short of revenue projections by more than 50%.
The edtech startup is mired in governance issues, its top investors including Prosus and Peak XV have alleged. The investor group is also separately legally fighting with Byju’s and seeking the removal of its founder Byju Raveendran. The startup’s board members and auditor resigned in protest last year.
The fight between the investor group, which includes Sofina and Chan Zuckerberg Initiative, escalated earlier this year after Byju’s reduced the company’s valuation to mere $25 million to raise capital via a rights issue.
A recent court order restrained Byju’s from proceeding with its second rights issue. BlackRock, a minority investor in Byju’s, recently wrote down the holding in Byju’s to zero.
