Byju’s was once India’s largest startup with a market valuation of $22 billion. The startup had attracted global investors and gained popularity for providing online courses during the Covid-19 pandemic. However, it’s now caught up in a dispute with US investors seeking $1 billion in unpaid dues.

A Troubled Past

Byju’s insolvency story started earlier this year. In July, the startup faced insolvency for failing to pay its board dues amounting to $19 million. In recent years, the edtech startup has suffered many setbacks, including boardroom exits and a tussle with investors.

The Board of Control for Cricket in India filed a complaint with the India Companies Tribunal. The tribunal ruling commenced Byju’s bankruptcy proceedings which included the appointment of an interim resolution professional to oversee the management of the company after the board of directors was suspended.

Byju’s investors have accused the startup founder and CEO, Byju Raveendran, of lapses in corporate governance, collapse in valuation, and job cuts. Byju’s is battling the insolvency case as it seeks to regain control. In the papers filed in court, the company warned of a total shutdown as the insolvency case continues.

Last week, India’s Supreme Court declined Byju’s request to stop the insolvency process.

Employee Fears

Byju’s insolvency case affected many parents and employees. A review of WhatsApp chats and interviews by Reuters revealed growing desperation as affected people plan to take action against the edtech company, whose assets have been frozen.

“A lot of people, including myself, have stopped taking classes because there’s no point doing charity for the company anymore,” Byju’s employee, Sukirti Mishra said.

Mishra taught mathematics at Byju’s and was earning $1200 each month. After halting classes, she faces anger from parents whose children she taught on the edtech platform. Having gone unpaid for months now, she struggles to pay medical bills and make loan repayments.

Byju’s 27000 employees have not been paid for three months. Most of them are considering suing the company and protesting on the streets.

About 3000 employees have filed salary claims and provided bank statements since the tribunal appointed an interim resolution professional. Through an internal memo released this week, Raveendran sought to array employees.

“Our company is on the verge of reversing the negative business cycle that began two years ago, showing clear signs of recovery. I guarantee this: When we regain control, your salaries will be paid promptly,” he said.

Tough Road Ahead

But the road ahead could be long and tough for Byju’s employees as it could take months to liquidate company assets or get a new buyer. There are no legal guarantees that the workers will ultimately recover their dues.

An estimated 280 workers have asked a state grievance panel to take action on their unpaid salaries. In a letter dated August 5, the employees accused Byju’s of failing to remit taxes deducted from their salaries to the government.

“We are deeply concerned about the company’s financial stability, our fear is that the company may be planning to shut down operations without settling our dues,” the employees wrote.

Byju’s customers fear that they’ll not be able to recover their money. The edtech startup has a 150 million student membership across 21 countries. Its programs cost between $100 and $300, with the majority being sold on loans.

Byju’s insolvency is set to be the largest in India’s tech startup landscape. Over the years, the industry has attracted investors such as Tiger Global and SoftBank.

The post Byju’s Employees Fear as Court Fails to Halt Insolvency appeared first on Tech Research Online.

Klarna is popular for its buy now, pay later loans that allow users to pay for products through interest-free installments. According to CNBC, the fintech company launched new products to encourage users to shift their saving and spending transactions on its platform.

New Opportunity

Klarna is rolling out the new products in 12 markets in Europe and the U.S. The company says the products will be reflected as ‘cashback’ and ‘balance’ on the Klarna App. According to Klarna’s founder and CEO, Sebastian Siemiatkowski, the products allow users to earn some money as they shop.

“These new products make it easier for customers to manage multiple scheduled payments, helping our customers use Klarna for more frequent purchases and driving loyalty. Klarna wants to support all consumers with their everyday spending and allow people to earn money while they shop and manage it in a Klarna account,” Siemiatkowski told CNBC.

EU customers will earn up to 3.58% interest on deposits made on Klarna. However, U.S. customers will not earn interest on deposits. In Ireland, Klarna will be competing with Revolut which is already offering interest-earning accounts to users. Revolut received a U.K. banking license last year.

Key Features

The new Klarna balance feature will allow users to keep their money in a personal account that’s very similar to a bank. They can use their deposits to purchase items and pay their buy now, pay later loans. Klarna users will also receive refunds directly in their accounts for any returned items.

The cashback feature allows users to earn rewards. Users can get up to 10% of the value of items they purchase from participating retailers as Klarna cashback rewards. The money earned is automatically deposited in their balance account.

This isn’t the first time that Klarna is offering conventional banking services. The fintech company has been offering savings and account products in Germany since 2021.

Klarna IPO

The unveiling of the two products is a major step for Klarna’s range of products as its U.S initial public offer draws closer. The company has not set a timeline for the stock market listing, but the company says the IPO could still happen this year. Early this year, Siemiatkowski gave the Klarna IPO update during a CNBC interview.

“We still have a few steps and work ahead of ourselves. But we’re keen on becoming a public company,” he said.

Klarna’s IPO valuation on the secondary market stands at billions of dollars. Currently, the fintech company is talking to investors about a share sale to provide it with some liquidity.

The post Klarna Unveils New Products Ahead of Much Anticipated IPO appeared first on Tech Research Online.

The EV maker was founded by Henrik Fisker seven years ago. Its founder designed the company’s electric SUV in 2022. He also designed Karma, a luxury plug-in hybrid that entered the market in 2011.

Rising Debt

The company has already filed documents with the U.S. Bankruptcy Court in Delaware state. The filing places the estimated value of company assets at between $500 million and $1 billion.

The company is looking to maintain its operations by restructuring its debt and selling its assets. Fisker got into financial trouble following attempts to increase production of Ocean SUVs.

“After evaluating all options for our business, we determined that proceeding with a sale of our assets under Chapter 11 is the most viable path forward for the company. Like other companies in the electric vehicle industry, we’ve faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently,” Fisker said in a statement.

Fisker’s liabilities range between $100 and $500 million. According to the Fisker bankruptcy filing, the biggest creditors include Adobe, SAP, and Google.

VP and Equity Analyst at CFRA Research, Garrett Nelson said, “Fisker has been on life support for months now, so today’s announcement doesn’t come as a surprise. It wasn’t the first EV upstart to declare bankruptcy and we don’t think it’ll be the last.”

Emerging Trend

The first time Fisker raised doubts about its ability to stay in business was in February of this year. After that, the company was unable to raise $350 million from a big automaker. This forced it to cut back on its operations.

“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently,” Fisker said.

But Fisker isn’t the only EV maker that has filed for bankruptcy. In 2022, Lordstown, Protera, and Electric Last Mile Solutions did the same. The main reason for this decision was low demand. The companies also grappled with operational challenges and experienced difficulties in fundraising.

A Tough History

Fisker EV first went public in 2020 after merging with a blank-check firm. At the time, its valuation was $2.9 billion.

The public listing presented a second chance for Henrik Fisker. His first auto venture was Fisker Automotive. The venture became bankrupt in 2013. Fisker filed for bankruptcy following the 2008 financial crisis. Fisker Automotive’s failure also resulted from a substantial recall of the Karma hybrid sedan due to battery failure.

Henrik Fisker had previously consulted for Tesla. He planned to make the Fisker EV the ‘Apple’ of the automobile industry. The company opted to outsource the manufacturing aspect of its asset-light model. This was intended to reduce production costs and cut the development time of vehicles.

But, Fisker EV’s Ocean SUV experienced hardware and software issues. Consumer reports called it ‘unfinished business’. Regulators are investigating the car for braking issues, doors problems, parking challenges, among other issues.

The post Fisker Files Bankruptcy Due to Rising Debt and Fundraising Challenges appeared first on Tech Research Online.