Byju Raveendran, founder of Byju’s, disclosed on March 2 that the company was unable to pay employee salaries due to funds raised from a recent rights issue being locked in a separate account amid an ongoing dispute with investors.
In a letter addressed to Byju’s employees, Raveendran expressed regret over the situation, stating that efforts would be made to ensure salaries are paid by March 10. He criticized a minority of investors for obstructing the utilization of funds raised through the rights issue, despite some investors having profited substantially from their investment in Byju’s.
The National Company Law Tribunal (NCLT) had directed Byju’s to keep funds from the rights issue in an escrow account until the resolution of an oppression and mismanagement plea filed by four investors. This plea contested Byju’s decision to raise funds at a significantly lower valuation compared to its previous funding round.
Recent upheavals within Byju’s include shareholders voting for the removal of Raveendran and his family from the board over alleged mismanagement. Raveendran reassured employees that efforts were being made to address the situation, despite facing significant challenges.
Byju’s has faced challenges in the past year, including layoffs and departures of investor board members, amidst funding shortages and reduced demand for online learning services. The company has taken steps to address these issues, including seeking investments, restructuring its leadership, and considering divestment of assets like Great Learning and Epic.
