Companies
Byju’s employees rush to file claims for their dues as deadline nears
Summary
- Byju’s, which was admitted to insolvency earlier this month, has delayed salaries, final settlements, variable pay, and other dues for current staffers and more than 10,000 employees it has let go in the past two years.
Mumbai: Current and former employees of Byju’s, once India’s most valued startup, are racing against time to claim unpaid salaries and other dues after the edtech company was admitted to insolvency earlier this month.
With a looming deadline of 31 July for filing claims related to unpaid dues from the online tutor, Byju’s employees have appointed legal professionals and law firms to recover their salaries and benefits.
The National Company Law Tribunal (NCLT) earlier this month appointed insolvency resolution professional Pankaj Srivastava to oversee the company’s daily affairs after admitting a bankruptcy petition against Byju’s by the Board of Control for Cricket in India (BCCI).
Efforts by the edtech company’s founder and chief executive, Byju Raveendran, to overturn the insolvency order through appeals to the National Company Law Appellate Tribunal (NCLAT) and the Karnataka High Court have been unsuccessful.
The next hearing is scheduled for 29 July at the Chennai bench of NCLAT.
Mint accessed a group of more than 800 Byju’s employees seeking to recover their compensation from the edtech company.
About 60 employees from this group are in the final stage of filing their claims with the help of Bengaluru-based law firm Canvas Legal.
Led by Rajat Singh, a former Byju’s tutor, they had filed a demand notice with NCLT on 4 July. However, the case was put on hold along with other pending lawsuits before Byju’s was admitted to insolvency.
“Some people have already submitted the required documents to the lawyers, and others will submit everything in a day or two," Singh told Mint. “We paid the fees the same way as before. This time too, we hired for a group instead of individually, so the fee was distributed per head."
Canvas Legal told Mint that it was in the process of filing the claims and declined to comment further.
Also read | Mint Explainer: NCLT admits insolvency plea against Byju’s. Here’s what it means for the edtech platform
Another group of 20 employees has also begun filing their claims with assistance from Delhi-based law firm SSA Lawgistics. “The claims that we have filed so far range anywhere between ₹55,000 and about ₹28,00,000," Simranjeet Singh, proprietor of SSA Lawgistics, said.
According to Simranjeet Singh, employees can recover unpaid dues only by filing claims with the insolvency professional. “I have been getting many calls and emails with queries on this separately as the deadline is inching very close now," he added.
Byju’s management, meanwhile, has urged its current employees to wait another month before filing claims stating that the founding team was working hard to save the company, people aware of the matter told Mint.
Byju's did not immediately respond to Mint's request for a comment.
A complex process
Durgesh Khanapurkar, partner at law firm Desai & Diwanji, said Byju’s employees can either file their claim individually or as a group making a consolidated claim through an authorized representative, setting out the claims of each employee.
The claims process involves submitting Form D, a notarised affidavit, and other supporting documents such as identity proof, bank statements, and proof of the owed amount, legal experts said. These requirements are stipulated by Regulation 18(1) of the Insolvency and Bankruptcy Board of India.
Some former employees of Byju’s are handling the claims process themselves using templates and a how-to document circulated in various groups. Others not familiar with such large-scale public forums are stranded as they do not understand the process for claiming their dues, are unaware of the deadline, or are unable to afford hefty lawyer fees to file an individual claim, as per text messages Mint has seen of other smaller groups of former Byju’s employees who had been laid off in 2022.
“Many people know about it but are still not filing claims because they feel they have no hope of getting their money," said Rajat Singh, the former Byju’s tutor quoted earlier.
Byju’s insolvency case
At the heart of the matter is NCLT’s 16 July order admitting BCCI’s plea for initiating a corporate insolvency resolution process against Byju’s.
The edtech company had in 2019 signed up to have its branding featured on the front of the Indian cricket team’s jersey. Eventually, BCCI dragged Byju’s to the bankruptcy court for allegedly defaulting on dues worth ₹158 crore. The NCLT, in its order, held that the insolvency proceedings were to be initiated as there was sufficient existence of debt and default in payment of its dues.
Raveendran has since moved the NCLAT challenging the NCLT order. The matter was posted for hearing on 29 July.
Raveendran has also approached the Karnataka High Court seeking suspension of the NCLT’s order and a stay on setting up a Committee of Creditors (CoC) until NCLAT hears his appeal. The high court last week deferred the hearing in the matter to 30 July.
Read more: The mountain of legal cases that could bury Byju’s
Mint had earlier reported that once the insolvency professional transfers control to the CoC, Raveendran will require majority approval from the committee for any settlement or resolution in the matter, significantly limiting his authority over the company’s future.
“The interim resolution professional shall receive and collate all claims submitted by creditors pursuant to the public announcement and thereafter constitute the committee of creditors comprising of financial creditors," said Khanapurkar of Desai & Diwanji law firm.
What next for employees?
Byju’s has delayed salaries, full and final settlements, variable pay, transfers of provident fund and tax deducted at source, and other payments for current staffers and more than 10,000 employees whom it has let go in the past two years, as per several media reports.
After the completion of the insolvency process, if Byju’s goes for liquidation, former employees who have filed claims with the insolvency professional are expected to recover their money as workmen compensation.
As per the Insolvency and Bankruptcy Code, 2016, workmen dues are prioritised after the insolvency professional’s fees and statutory payments.
Also read | Byju’s startup lesson: Don’t get carried away with winner-takes-all dreams
“Section 53 of the IBC sets out the waterfall mechanism for distribution of assets in the event of liquidation of a company," Khanapurkar said.
“As regards the timeline, Regulation 42 of the IBBI (Liquidation Process) Regulations, states that payment to all stakeholders (set of persons mentioned in section 53 of the IBC) shall be made by the Liquidator within 90 days from the date of realization of assets of the company," he added.
The jobs of Byju’s 10,000-odd current employees in India will also depend on the outcome of the bankruptcy proceedings.
As the clock ticks toward the 31 July deadline, the fate of thousands of Byju’s employees hangs in the balance as they hope for a resolution to their financial nightmare.
