From Dream to Nightmare: Byju’s Transformation into a Troubled Startup

A consortium of lenders associated with Byju’s, the Indian education-technology startup, is collaborating with the company to renegotiate the terms of a $1.2 billion loan after the company encountered financial difficulties, as per sources familiar with the situation. The steering committee of creditors and Byju’s have entered into discussions with the aim of reaching a formal agreement before August 3, though the talks are still in progress and subject to change.

For Byju’s, once hailed as India’s most valuable startup, recent months have been marked by a series of crises. The company’s auditors resigned, and it faced scrutiny from India’s anti-money laundering officials, along with missing an interest payment on its term loan. The company’s financial woes were exacerbated by a decline in demand for online tutoring following the reopening of schools, while heavy spending on marketing, including sponsorships of India’s national cricket team and the FIFA World Cup, further strained its finances. Financial statements for the fiscal year up to March 2022 are not publicly available, but the most recent ones revealed a significant increase in expenditure while revenue declined.

Deloitte Haskins & Sells, the former auditors of Byju’s, resigned just last month due to a delay in submitting financial statements, prompting a government-mandated inspection of the company’s finances. In the same month, Byju’s chose to halt payments on the $1.2 billion term loan and skipped a $40 million interest payment. Additionally, the company filed a lawsuit in New York, accusing a group of investors of orchestrating a fabricated debt crisis to extort money from Byju’s, a claim the lenders’ group has refuted, calling it baseless.

The potential restructuring of the loan terms comes as a crucial development for Byju’s, offering a glimmer of hope amidst its mounting troubles. However, the situation remains fluid as negotiations continue.