General Atlantic, Prosus knock Supreme Court door to factor in concerns in Byju's insolvency case

Byju's crisis: Beleaguered edtech giant, Byju's, once valued at $22 billion, is again under the radar as big foreign investors like General Atlantic and Prosus approached the Supreme Court of India to raise their grievances in relation to the ongoing insolvency process of the company. The top court has been urged by the investors to take into account their view, while making a decision on Byju's future, as per a court filing viewed by news agency Reuters.

Byju's, an online educational company that saw unprecedented fame during the COVID-19 pandemic, is now in a legal wrangle with the United States' lenders who seek $1 billion in unpaid debts. The dispute has triggered the bankruptcy process, further worsening the situation for the company and its founder and CEO, Byju Raveendran.

The most recent filing, dated August 25, pertains to four significant foreign shareholders—General Atlantic, Prosus, Peak XV (formerly known as Sequoia Capital), and Sofina—who together possess nearly 17 per cent of Byju's. The investors conveyed their apprehensions regarding the purported mismanagement within the company, which corresponds with the complaints of the US lenders. While they do not favor the insolvency itself, they seek to brief the Supreme Court on the relevant issues in hopes of making sure that their interests are considered by the Court.

The move by overseas investors comes just weeks before the Supreme Court is set to hear, on Friday, an appeal in the insolvency matter of Byju's. Inclusion of these investors would heighten the stakes for Raveendran as he tries to oppose the insolvency process and regain control over the firm, now being managed by a court-appointed administrator.

The development comes in the backdrop of a series of legal disputes and financial struggles faced by Byju's these past few months. On August 14, the Supreme Court restored insolvency proceedings against the company through the ending of a previous order by an appellate tribunal. This ruling was seen as a victory for US lenders, who had been seeking their dues against Byju's.

The case was filed upon a complaint by BCCI over outstanding sponsorship fees. But with a settlement already in place between the two, the Supreme Court's directive to reinstate the insolvency case against Byju's rendered that agreement null, putting the latter once again into the throes of potential legal jeopardy.

To add to the chaos even more, Dutch technology investor Prosus made history this June as the first major investor to fully write down the value of its investment in Byju's, citing a significant impairment for equity investors. At the same time, Raveendran has continued to deny any wrongdoing and has warned that the bankruptcy process may result in the end of the company's operations, which employ 27,000 people.

The incident also provoked protests by employees at Byju's and parents of the students taking classes on the platform. Interviews conducted by Reuters suggested that such protest groups are planning a social campaign to get the payment of salaries and dues pending, and thereby increase pressure on the embattled edtech company.