The US division of Indian multinational EdTech firm BYJU’s, has filed for Chapter 11 bankruptcy after defaulting on debt of $1.2 billion, in Delaware. The company is now declared as a shell company. Alpha Inc., a unit of Byju’s, failed to fight with its parent company about the debt due to insufficient funding according to the court papers filed by the unit’s recently appointed Chief Executive Officer, Timothy Pohl.
The once-most popular startups in India, BYJU’s was founded by Byju Raveendran and his wife Divya Gokulnath in 2011. The company earned the title of “most-value Edtech firm” due to its popularity in terms of making learning more engaging and accessible. Using a unique approach that incorporated adaptive learning technology through interesting tutorials, BYJU’s succeeded in providing personalized learning experiences for students across India.
Not a first for Byju’s
The bankruptcy filing is the latest in a series of escalating troubles for the online tutor, as the company faced a series of challenges, including accounting irregularities, ED notices, massive layoffs, and term loan issues previously. On Thursday 1st February 2024, the key investors who collectively hold an approximate 30% percent stake in BYJU’s, namely General Atlantic, Prosus Ventures, Peak XV, and Chan Zuckerberg urged for an emergency meeting of shareholders.
The meeting aimed to address the governance, financial mismanagement, and compliance issues, along with plans to oust the company’s top leadership that includes Raveendran too, and to restructure its board members respectfully. Additionally, the resolutions put forward for the EGM to consider also includes a request for the resolution that the firm would no longer be controlled by the founders of T&L as well, according to the notice issued.
Interestingly, BYJU’s is yet to respond to queries regarding this development. Apart from this, the Edtech giant is also under the scanner of Indian authorities over allegedly violating FEMA (Foreign Exchange Management Act) norms. The company allegedly did not submit documents of imports against advance remittances made outside India, and failed to realize proceeds of exports, according to a notice issued to both Byju Raveendran and the parent company Think & Learn limited on November 21 2023, by the Enforcement Directorate of India.