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OPPO Mobiles, a Chinese electronics manufacturer, has initiated an insolvency plea against the troubled edtech startup Byju’s to recover its dues.
The plea, which is filed under Section 9 of the Insolvency and Bankruptcy Code (IBC) 2016 at the Bengaluru bench of the National Company Law Tribunal (NCLT), seeks to start a corporate insolvency resolution process due to Byju’s default.
The specific amount owed by Byju's has not been disclosed.
Growing list of creditors
The action places OPPO among a growing list of operational creditors that have pursued legal actions against Byju’s, which is currently struggling financially.
Other creditors include the Board of Control for Cricket in India (BCCI), Teleperformance Business Services, and Surfer Technologies.
Each of these entities has filed separate insolvency petitions against Byju’s, with multiple cases being heard by a bench led by Justices K Biswal and Manoj Kumar Dubey.
Legal proceedings and settlement efforts
During a recent hearing, Teleperformance Business Services indicated that settlement discussions with Byju’s were progressing positively, and their counsel requested additional time to finalize a settlement. Byju’s counsel made a similar request.
The NCLT has granted Teleperformance 15 days to reach a settlement, with the next hearing scheduled for May 28. If no settlement is achieved, the matter will be evaluated based on its merits.
Financial troubles for Byju’s
Byju’s is experiencing significant financial difficulties. Due to a court order, it has been unable to access $200 million raised from a recent rights issue. The company's debts, including unpaid dues to employees, debtors, and vendors, have continued to grow.
Additionally, Byju’s India chief executive, Arjun Mohan, resigned in April after a notably challenging quarter, with the company’s outstanding debt in India and the U.S. mounting to more than $400 million collectively.
The situation is compounded by a mismanagement suit filed by a group of investors, including Prosus, General Atlantic, and others, who are opposing a recently concluded rights issue. An interim order from the NCLT directed that the funds from this issue be kept in a separate escrow account, with the next hearing on this matter scheduled for June 6.