Mumbai (TIP)- The parent company of troubled edtech giant Byju’s called Think and Learn Pvt Ltd was put into insolvency by the National Company Law Tribunal (NCLT) on July 16, due to a plea filed by the Board of Control for Cricket in India (BCCI) after the company failed to pay sponsorship dues worth Rs 158 crore.
Byju’s, once one of India’s hottest startups, valued at $22 billion, entered a financial crisis with debts piling up after demand for online education which skyrocketed during the Covid-19 pandemic-induced lockdowns, cooled. The company is now in insolvency and Pankaj Srivastava has been appointed as the interim resolution professional after the entire management headed by founder Byju Raveendran, was legally suspended. The committee of creditors will now run the company for 330 days during which they can find a buyer for the company. If they are unable to do so within 330 days, the company will get liquidated.
Around 160-200 former employees of Byju’s who were laid off due to falling revenues had complained to the Karnataka labour commissioner that their full settlement was not yet made, according to a Moneycontrol report. The total dues amounted to 4.5 crore.
Employees usually will be able to recover their dues because dues to employees for 24 months before the liquidation process are the second most important priority for settlements, under section 53(1) of the Insolvency and Bankruptcy Code (IBC), 2016, with the first one being the resolution professionals themselves. Dues to employees 12 months before the liquidation are the 3rd most important priority. Creditors come into the picture only after this. Current and former employees of Byju’s have to take note that the company had allegedly not paid their tax deducted at source (TDS) since as early as last year’s July, according to the report.
The tax comes fifth in terms of priority as per the IBC. The liability will be on the hands of the suspended management as its their fault, but the government can also claim it from the resolution professional.
The committee of creditors can choose to retain employees or terminate them over the next 330 days. In the case of grounded airline Go First, they retained 2,278 employees, according to the report. But these employees weren’t reporting to work due to not getting salaries, which was because funds weren’t available.
However, Byju’s case is different as it is still making revenues unlike the grounded airline. Source: HT