Putting up a brave face, Byju Raveendran said in a recent interview that despite all his troubles and ongoing litigation, he will come out stronger and launch ‘Byju’s 3.0′. The edtech major’s current situation, however, signals that the road ahead could be anything but smooth. The troubled firm has been forced to offload two of its US assets, Epic and Tynker, at a fraction of their original acquisition cost in a court-approved distress sale.
The Delaware bankruptcy court has approved the sale of the children’s reading platform Epic for $95 million and coding platform Tynker for just $2.2 million. These were bought by Byju’s in 2021 for $500 million and $200 million, respectively. Epic has been acquired by China’s TAL Education Group, while CodeHS has taken over Tynker, following a competitive 48-round auction, according to EdWeek Market Brief.
These asset sales form part of ongoing bankruptcy proceedings in the US, where Byju’s lenders are attempting to recover a portion of a $1.2-billion term loan extended to the company. Byju’s defaulted on this loan over 17 months ago and has since faced multiple legal battles over repayment and alleged financial mismanagement.
Byju’s had acquired Epic and Tynker as part of an aggressive expansion strategy into the US market during the pandemic, aiming to scale its global presence. However, the rapid spree, backed by significant debt, has now led to an unravelling. Alongside Epic and Tynker, another US subsidiary, Osmo, was also involved in the bankruptcy proceedings. These entities served as guarantors for the term loan raised through Byju’s US arm Alpha in 2021.
The company’s troubles in the US were compounded by stalled negotiations with lenders, ongoing litigation and a lack of timely restructuring. Attempts to sell Epic had been delayed for months due to these issues. The final deal was only possible under court supervision after lenders initiated Chapter 11 proceedings against the company’s American units.
Raveendran, along with co-founder Divya Gokulnath and former executive Anita Kishore, is also facing a lawsuit in the US over allegations of hiding $533 million in loan funds. A Delaware court found that Raveendran had violated his fiduciary duties as director of Alpha and indicated that several fraudulent transfers may have taken place.
In India, the company’s troubles are no less severe. It is undergoing insolvency proceedings, auditors have stepped down, and investor confidence has eroded. Once valued at $22 billion, the edtech firm’s current valuation is estimated to have dropped below $1 billion.
Between 2017 and 2021, Byju’s made 17 acquisitions, spending over $3 billion, including around $820 million in the US alone. The largest was Aakash Educational Services in India, bought for $950 million. Other platforms like WhiteHat Jr, Osmo, and The Great Learning were also part of this spree. However, many of these acquisitions are now under review or facing restructuring. For instance, Aakash has already distanced itself from Byju’s.