The National Company Law Tribunal (NCLT) has issued a stern ultimatum to edtech giant Byju’s: pay your employees’ salaries or be prepared to undergo a financial audit. The court’s decision came during a hearing in response to a plea filed by a group of Byju’s employees seeking their unpaid dues.
Despite financial challenges, the NCLT emphasized that Byju’s remains an operational company. It must be generating some revenues to meet its salary obligations. Byju’s now faces a critical choice. It must either demonstrate its inability to pay salaries or be ready to undergo a comprehensive audit.
Several employees have yet to receive their full salaries for the months of February and March. Founder and CEO Byju Raveendran attributed this delay to investors restricting the company’s access to funds raised through a rights issue.
In April, Byju’s implemented significant layoffs, affecting at least 500 jobs. The company also relinquished most of its office spaces.
In a previous interim order, the NCLT directed Byju’s to hold all funds raised from its $200 million rights issue in a separate escrow account. The company was also barred from withdrawing these funds until the resolution of a mismanagement and oppression suit filed by certain investors against the management.
Byju’s investors, including Prosus, Peak XV Partners, Sofina, and General Atlantic, have consistently opposed the rights issue. They recently challenged the Karnataka High Court’s decision to set aside the NCLT’s stay on Byju’s second rights issue.
In summary, Byju’s faces a critical juncture: prove its financial constraints or prepare for an audit. The outcome will significantly impact the company’s future operations and employee welfare.
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