India’s top court has put on hold a tribunal ruling that halted Byju’s insolvency proceedings — a win for U.S. creditors that are seeking to recover $1 billion from the once-celebrated edtech startup.
The Indian Supreme Court on Wednesday ordered a stay on the National Company Law Appellate Tribunal’s recent approval of a settlement between the Indian cricket board BCCI, which had halted the insolvency proceedings. The Supreme Court’s order means that the proceedings will now resume.
The Wednesday ruling is the latest in a slew of crises for cash-strapped Byju’s, which was once India’s most valuable startup with a $22 billion valuation.
The startup’s troubles began a couple years ago, but they escalated last month after the Indian tribunal court initiated insolvency proceedings after the firm failed to pay over $19 million it owed to the BCCI, which holds significant sway in India as the formal body overseeing cricket, the most popular sport in the country.
Byju’s averted the proceedings when the CEO’s brother, Riju Raveendran, agreed to pay the BCCI. An appeals tribunal then dismissed the insolvency case.
U.S.-based Glas Trust, which represents some lenders to a Byju’s group company, had opposed the tribunal’s decision, arguing that Riju Raveendran had used the lender’s capital to pay the BCCI.
Between 2020 and 2021, Byju’s raised more than $2.5 billion, including a $1.2 billion Term B loan from a group of U.S. creditors. The startup sought to go public in early 2022 at a valuation over $40 billion, but had to abruptly shelve those plans after Russia’s invasion of Ukraine tanked the global market.
Byju’s did not immediately respond to requests for comment.
The startup has been fighting fires on nearly every front for the past two years. Its troubles grew significantly when it missed financial reporting deadlines and fell short of revenue projections by over 50% in 2022.
Top investors, including Prosus and Peak XV, have alleged governance issues at the edtech firm, and even sought legal action to remove founder Byju Raveendran and gain control over the firm, which has raised over $5 billion in equity and debt.
Last year, board members and the startup’s auditor abruptly resigned in protest.
The conflict intensified when Byju’s slashed its valuation to $25 million, seeking to raise funding via a rights issue, prompting backlash from investors including Prosus, Peak XV, Sofina and Chan Zuckerberg Initiative. The was ordered to not use the capital it raised in the rights issue, and was blocked from attempting to raise a second rights issue.
Prosus and BlackRock have written down the value of their Byju’s stakes to zero.