BYJU'S: Round-up of controversies surrounding the edtech giant
BYJU'S is never far from the headlines. The high-flying edtech firm has been embroiled in multiple controversies over the past year. From the late announcement of financial results to the alleged toxic work culture to issues with lenders, the company has been never short of problems. Here, we take a look at some of the recent controversies surrounding India's most valuable start-up.
BYJU'S filed a lawsuit against its lenders
The $1.2 billion loan it took to enhance its acquisition war chest has turned out to be one of the biggest headaches for BYJU'S. The loan is now the subject of two lawsuits. One was filed by lenders accusing BYJU'S of defaulting on payments, and the other by the edtech company challenging the acceleration of the loan repayment by the lenders.
Company sent a notice to disqualify one of the creditors
Apart from filing a lawsuit, BYJU'S also sent a notice to Redwood Capital Management seeking to disqualify it as a Term Loan B (TLB) lender. The contract with creditors gives BYJU'S the right to disqualify lenders. The creditors unsuccessfully tried to challenge this right. Due to two pending lawsuits, BYJU'S halted the payment of $40 million as interest on the loan.
Lenders accused BYJU'S US arm of hiding $500 million
During the hearing of the lawsuit filed against BYJU'S in Delaware, the creditors accused the company's US arm (BYJU'S Alpha) of hiding $500 million. The creditors alleged BYJU'S transferred the money out of BYJU'S Alpha. The company, however, claimed it transferred funds to protect the money from predatory lenders. In Delaware, the lenders are battling BYJU'S to gain control of BYJU'S Alpha.
ED conducted raids in 3 premises related to BYJU's
BYJU'S is also the focus of multiple issues within India, its home country. In April, the Enforcement Directorate (ED) conducted searches in two premises connected to BYJU'S and one linked to co-founder and CEO Byju Raveendran in relation to a case filed under Foreign Exchange Management Act (FEMA). Per ED, BYJU'S received foreign direct investment of Rs. 28,300 crore between 2011-2013.
BYJU'S is yet to publish its FY22 results
The issues with lenders and ED are in one way connected to BYJU'S failure to announce its audited financial results on time. It announced its FY21 results in September 2022, 18 months after they were supposed to be published. As per the agreement with creditors, it was required to release FY22 results by September last year and hasn't shared them to date.
Current and former employees described BYJU'S as toxic
BYJU'S landed in the midst of another controversy when some of its employees talked about the toxic nature of the workplace. During an interview with Context, 26 current and former staffers spoke about how they are routinely mistreated by managers. "We are treated like slaves. At what cost are they making their revenue, their valuation? By crushing us," a former employee said.
BYJU'S was accused of buying children's phone numbers, threatening parents
BYJU'S has often been criticized for its aggressive marketing strategy. In December last year, it was alleged that the company bought the phone numbers of children and their parents. It was also accused of threatening people into buying their courses. As a result of this, the National Commission for Protection of Child Rights (NCPCR) summoned Raveendran for an in-person hearing.
BYJU'S was criticized for partnership with Messi shortly after layoffs
BYJU'S landed in another pickle after it announced Lionel Messi as the company's first global brand ambassador. On normal days, it is great news. However, BYJU'S did it shortly after it revealed its plan to lay off 2,500 employees. The deal with Messi invited the wrath of social media. The company called the deal a "social partnership."
