Byju's founder secures private debt to meet employee salaries, says report

While senior-level staff received partial payments, teachers and lower-ranking employees were paid in full for March, it added.

The firm had previously disbursed partial salaries for February and delayed payments for March, but now both February and March salaries have been partially settled, as per the report.

Byju's, with about 15,000 employees, has a total salary expenditure ranging between ₹40 and 50 crore, sources told the paper.

Delay Tied to Locked Funds Amid Investor Dispute

The delay in salary payments is linked to funds raised through a recent rights issue, which have been locked in a separate account due to an ongoing dispute with investors.

Earlier on April 8, Byju's started paying salaries for March after delaying it for two months. In an e-mail sent to its employees, the edtech company said that it has arranged an alternative line of credit to pay salaries on time.

"The salaries got credited on Saturday. Byju Raveendran raised more personal debt to pay salaries this month. The rights issue money is still blocked by foreign investors. Tomorrow is the National Company Law Tribunal (NCLT) hearing, and the firm may request the tribunal to release the funds," one source said.

In the employee email too, Byju's had said it is yet to secure any approval to access the rights issue funds. Adding that the company is not allowed to use the proceeds of recently floated rights issue.

Byju's management, including Raveendran, assured employees that regardless of the court verdict, they would receive their March salary through a parallel line of credit.

NCLT Dispute - The Details

Byju's investors including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, have filed a plea challenging the company's decision to raise $200 million at a post-money valuation of $225 million.

Following this, the NCLT ordered Byju's to retain the funds from the rights issue in an escrow account until the plea is resolved, resulting in staff salaries getting delayed. The company also sought arbitration in its dispute with its key investors.

The NCLT has given Byju's 10 days to file its response in the matter. The case will be next heard on April 23. On April 5, an arbitrator asked Byju's to not sell the shares of a group firm after it breached the terms of loans worth $42 million.

The NCLT Bengaluru bench, on April 18 also granted Byju's a week to negotiate a settlement with Teleperformance Business Services regarding its payment default, aimed at preventing new insolvency proceedings against the struggling edtech firm.

Teleperformance Business Services, an operational creditor, had initiated insolvency proceedings after Byju's failed to make a ₹5 crore payment.

Meanwhile, Byju Raveendran received an extended relief from the Karnataka High Court, which allowed him to remain at the helm of Byju's, amid a volley of charges and countercharges between his troubled edtech company and its investors.

A clutch of key investors in Byju's, including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, had voted to oust Raveendran as the chief executive officer of the company he founded, citing mismanagement. Byju's has said the meeting was invalid without the presence of at least one of the founding members.

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Published: 23 Apr 2024, 11:53 AM IST