Edtech giant Byju’s insolvency case heightening employees concerns; Whatsapp chats revealed

The potential insolvency of Byju's, a prominent Indian education technology company, could become the largest disruption in the once-thriving startup sector, sparking a prolonged struggle among thousands of anxious employees to recover their owed compensation and safeguard their careers, according to Reuters report.

Once a favorite among global investors and valued at $22 billion in 2022, Byju's gained popularity by providing online courses during the COVID-19 pandemic. However, it is now embroiled in a dispute with U.S. lenders over $1 billion in unpaid debts.

Reuters report further revealed that there is a growing sense of desperation among numerous employees, parents of students, with many planning to take action against the company, whose board has been suspended and assets frozen.

"A lot of people, including myself, have stopped taking classes because there's no point doing charity for the company anymore," Sukriti Mishra, who is a mathematics teacher at WhiteHat Jr told Reuters.

Mishra, who used to earn $1,200 a month teaching mathematics courses, now faces the anger of parents after she stopped holding classes for their children.

However, she is currently struggling to cover her medical bills and loan payments, as she hasn't received her salary for several months.

Byju's, which is fighting the insolvency process in court in an attempt to regain control, did not respond to Reuters' inquiries. The company has cautioned in court documents that the continuation of the insolvency proceedings could lead to a complete shutdown of its services.

On Thursday, India's Supreme Court refused Byju's request to pause the ongoing insolvency process, which stems from a legal challenge by the company's U.S. lenders.

With salaries unpaid for three months, many of Byju's 27,000 employees are contemplating protests or legal action.

Since the court-appointed officer assumed control of the company, approximately 3,000 employees have filed claims, submitting bank statements as evidence, according to a senior company executive who spoke on the condition of anonymity.

"I guarantee this: When we regain control, your salaries will be paid promptly," company founder and former billionaire Byju Raveendran assured staff this week in an internal memo.

Employees have a challenging journey ahead, as finding a new buyer or liquidating Byju's assets may take months. Additionally, there is no legal assurance that employees and teachers will recover all their outstanding payments.

Since its founding in 2011, Byju's has faced several difficulties, including boardroom departures, criticism over delayed financial disclosures, and an auditor resignation.

Investors like Dutch technology firm Prosus have accused Raveendran of mismanagement in public disputes, though he has denied any wrongdoing.

WhatsApp groups talks

If the insolvency process proceeds, it could become the largest case among India's tech startups, a sector that has long drawn investment from major players like SoftBank and Tiger Global.

Approximately 280 Byju's employees have appealed to a state grievance panel, seeking intervention over unpaid salaries and alleging that the company has failed to remit the taxes it withheld from their wages to the government.

"We are deeply concerned about the company's financial stability ... our fear (is) that the company may be planning to shut down operations without settling our dues," they said in a letter on Aug. 5.

The whatsapp groups are deliberating their next moves, evaluating whether social media campaigns, street protests, or legal action will be most effective.

Byju's, which operates in 21 countries and serves 150 million students, generally prices its programs between $100 and $300, with many being purchased through loans.

To attract attention, concerned parents—primarily focused on recovering their payments—have even considered reaching out to former Byju's brand ambassadors, like Argentine soccer star Lionel Messi.

"We should post on Instagram," one user in the WhatsApp group for parents, was quoted as saying by Reuters. "We can tag them and show them the reality."

At the moment, Raveendran is defying the odds. "Our company is on the verge of reversing the negative business cycle that began two years ago, showing clear signs of recovery," he told staff in a memo on Tuesday.

(With inputs from Reuters)