By Aditya Kalra and Arpan Chaturvedi
NEW DELHI (Reuters) - Insolvency proceedings against ed-tech giant Byju's, once India's biggest startup valued at $22 billion, will likely force thousands of employees to quit and result in a total shutdown of its services, its CEO said in a court filing seen by Reuters.
Byju's, backed by investors like Prosus (OTC:PROSF) and General Atlantic, has suffered numerous setbacks in recent months, including job cuts, a collapse in its valuation and a tussle with investors who accused CEO Byju Raveendran of corporate governance lapses. Byju's has denied any wrongdoing.
Now Byju's is facing its biggest crisis after an Indian tribunal this week triggered insolvency proceedings following a complaint by the country's cricket board over an outstanding payment of $19 million related to a sponsorship deal. Byju's assets have been frozen and its board has been suspended.
The insolvency process will likely cause vendors who provide critical services to Byju's for the upkeep of online platforms to declare a default, "leading to a total shut down of services" and bringing the operation to "a grinding halt," Raveendran said in a court appeal seeking to quash the insolvency process.
The 452-page filing at the High Court of Karnataka, made by Raveendran's counsel MZM Legal, is not public but has been reviewed by Reuters, and details the possible business impact on the company for the first time.
The court will hear the case on Monday.
Byju's and Raveendran did not respond to Reuters queries.
Byju's, which operates in more than 21 countries, became popular during the COVID-19 pandemic by offering online courses. It also offers in-person coaching classes.
The company's employees "shall suffer ... and may be forced to leave the organization," the filing added, saying Raveendran was willing to pay the oustanding dues to the Indian cricket board within 90 days.
Byju's has around 27,000 employees, including 16,000 teachers.