Byju’s latest round of layoffs coincides with a legal fight with US lenders.
Written By Rajan Das
Byju’s, the Indian edtech giant, has recently announced a fresh round of layoffs that affects around 1,000 employees across various departments. This comes amid a legal dispute with its lenders in the US over a $1 billion term loan B that the company had raised earlier this year.
Byju’s is one of the most valued startups in India, with a valuation of over $16 billion. It offers online learning courses for students from kindergarten to grade 12, as well as test preparation and upskilling programs. It has also acquired several other edtech companies, such as WhiteHat Jr, Aakash Educational Services, Epic and Great Learning.
However, the company has also faced several challenges in its growth journey. In October 2022, Byju’s announced that it would lay off about 5% of its 2,500 employees over six months as part of its cost optimization and profitability plan. The company said that it would outsource some of its operations and focus on its core products and markets.
The latest round of layoffs is an extension of this plan, according to a source familiar with the development. The source said that the final headcount of the company remains around 50,000 because of the addition of new employees. The company did not respond to an email query seeking comment on the layoffs.
The layoffs come at a time when Byju’s is embroiled in a legal battle with its lenders in the US over a $1 billion term loan B that it had raised in March 2023. The loan was supposed to be used for funding its acquisitions and expansion plans. However, some of the lenders have alleged that Byju’s breached some of the covenants of the loan agreement and have filed a lawsuit against the company in a New York court.
The lenders have claimed that Byju’s failed to disclose some material information about its financial performance, acquisitions and regulatory issues. They have also accused Byju’s of diverting funds from the loan to other purposes and entities. They have sought an injunction to prevent Byju’s from using or transferring any of the loan proceeds and have demanded repayment of the loan with interest and penalties.
Byju’s has denied the allegations and has filed a counterclaim against the lenders. The company has argued that it has complied with all the terms and conditions of the loan agreement and has provided all the necessary information to the lenders. It has also accused the lenders of acting in bad faith and trying to extort more money from the company by making false claims.
The legal dispute is still ongoing and could have significant implications for Byju’s future growth plans and valuation. The company is reportedly planning to go public in 2024 and is aiming for a valuation of $50 billion. However, the outcome of the lawsuit could affect its ability to raise more funds or make more acquisitions.
Byju’s is not the only Indian startup that has faced legal troubles in the US over its fundraising activities. In 2019, OYO Hotels and Homes was sued by one of its investors, Greenoaks Capital Partners, for allegedly inflating its revenue and valuation numbers. The case was settled out of court in 2020.
The cases highlight some of the risks and challenges that Indian startups face when they raise funds from global investors or enter new markets. They also underscore the need for more transparency and accountability in their financial reporting and governance practices.
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