Byju’s crisis: An arbitrator, appointed under Singapore International Arbitration Centre rules, has ordered Byju’s not to dispose of 4 million shares of Aakash, which amounted to a 6 per cent stake as per the loan agreement.
Byju’s breached loan terms, arbitration initiated against edtech company
Beleaguered ed-tech startup Byju’s reportedly breached terms of loans worth $42 million. It has been asked by an arbitrator to not sell some shares of a group firm, as per a confidential order. The edtech firm has been battling allegations of mismanagement, and CEO Byju Raveendran’s net worth has taken an exponential dip subsequently. Byju’s, once India’s hottest startup valued at $22 billion, is now valued at around $250 million.
According to a report in Reuters, billionaire doctor Ranjan Pai-led MEMG Family Office initiated arbitration proceedings against Byju’s in March for not repaying its loans amounting to $42 million through a pre-agreed transfer of certain shares of Aakash Education, a group company.
An arbitrator, appointed under Singapore International Arbitration Centre rules, has ordered Byju’s not to dispose of 4 million shares of Aakash, which amounted to a 6 per cent stake as per the loan agreement. The arbitrator wrote in his order that a “case of breach of the loan agreement” has been made out.
A source told the news agency that Byju’s is in talks with MEMG to resolve the matter.
Byju’s said it could not obtain approvals from certain investors in time, which were necessary to transfer the shares to MEMG, as per the order.
The edtech firm’s troubles persisted as an auditor exited, it faced regulatory probes and the investors called for the ouster of founder-CEO Byju Raveendran for mismanagement. The company has not been able to pay its staff in recent months as it cannot access the funds it recently raised due to legal trouble with some of the investors.
