Byju’s holds off salaries for second time in a row amid legal disputes
Struggling edtech giant Byju's has opted to postpone its staff salaries for the second consecutive month, pending the National Company Law Tribunal (NCLT) order to utilize funds from the proceeds of the rights issue.
“We are writing to you today with a heavy heart, but with a message of hope and reassurance. We regret to inform you that there will again be a delay in the disbursement of salaries. A few misguided foreign investors in Byju’s have obtained an interim order in lateFebruary, which has restricted usage of the funds raised through the successful rights issue,” said the company in an email to employees on April 1. businessline has reviewed a copy of the letter.
“This irresponsible action by the four foreign investors has compelled us to temporarily hold the disbursal of salaries until the restriction is lifted,” the email added.
LINE OF CREDIT
The company said it is following a parallel line of credit to ensure that employee salaries are disbursed by April 8.
The company management also said that it has the necessary votes to increase the authorised capital for the rights issue, a prerequisite to bring the rights issue into effect. “It means that once the restrictions on using the raised funds are lifted, we can meet all our salary commitments immediately,” the email added.
“As you might have read, our founder, Byju Raveendran, has once again appealed to disgruntled investors in a collaborative spirit, and we are hoping that litigating investors would have a reasonable spirit in not frustrating our daily lives any longer,” it further added.
This is the second time Byju’s has faced the same problem, as it had held back February salaries and later paid a part of the dues to employees in midMarch. The company is yet to pay the remaining February salaries to its staff.
VOTING PROCESS
Earlier, on March 29, Raveendran, in a letter to shareholders, said that in response to the postal ballot announced on March 7, the company received more than 50 per cent of votes in favour of increasing the authorised share capital.
The voting process for the resolutions discussed in the meeting will go on till April 6.