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Firm was once valued at $22 bln in India

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Fall seen as setback for employees, startup sector

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Employees weigh legal options, protests

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Lenders' dispute triggered insolvency case

By Ashwin Manikandan, Arpan Chaturvedi and Munsif Vengattil

BENGALURU/NEW DELHI, Aug 22 (Reuters) - The insolvency

of Indian education technology company Byju's threatens to be

the biggest upset in a celebrated startup sector, unleashing a

long battle by thousands of panic-stricken employees to recover

dues and protect their careers.

Once a darling of global investors, valued at $22 billion in

2022, Byju's became popular by offering online training courses

during the COVID-19 pandemic, but is now locked in a dispute

with U.S. lenders seeking $1 billion in unpaid dues.

Reuters interviews with dozens of its employees, parents of

students and a review of WhatsApp chats show a growing sense of

desperation as people plan to take the offensive against the

company whose board stands suspended with assets frozen.

"A lot of people, including myself, have stopped taking

classes because there's no point doing charity for the company

anymore," Sukirti Mishra, 29, said on a conference call with

Reuters held by about 60 employees of Byju's unit WhiteHat Jr.

Mishra, who once earned $1,200 a month teaching mathematics

courses, now faces the anger of parents after she halted classes

for their children, she said on the call attended by Reuters.

But she herself is struggling to pay medical bills and loans

installments, after having gone unpaid for months.

Byju's, which is battling the insolvency move in court to

try and regain control, did not respond to Reuters' queries. In

court papers it has warned of a total shutdown of services as

the insolvency proceeds.

India's Supreme Court is set to hold on Thursday its next

hearing in the insolvency process it allowed to continue last

week, when it sided with the protesting U.S. lenders.

After three months without pay, many of Byju's 27,000

employees are considering street protests or lawsuits.

Since a court-appointed officer took charge of the company,

about 3,000 of them have filed claims, providing bank statements

as proof, said one senior company executive, who spoke on

condition of anonymity.

"I guarantee this: When we regain control, your salaries

will be paid promptly," company founder and former billionaire

Byju Raveendran assured staff this week in an internal memo seen

by Reuters.

Employees face a long road ahead as it could take months to

find a new buyer, or liquidate Byju's assets. And the law gives

no guarantee that employees and teachers can recover all their

dues in the end.

Byju's, started in 2011, has suffered numerous setbacks in

recent months, from boardroom exits and criticism over delayed

financial disclosures to an auditor resignation.

Investors such as Dutch technology investor Prosus accused

Raveendran of mismanagement in disputes that became public,

though the executive has denied wrongdoing.

ANXIETY IN WHATSAPP GROUPS

If the insolvency process continues, it is set to be the

biggest among India's tech startups, a sector that has attracted

the likes of SoftBank and Tiger Global over the years.

About 280 employees of Byju's have approached a state

grievance panel to demand action on unpaid salaries, accusing

the firm of not paying to the government the taxes it deducted

from their salaries.

"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," they said in a

letter on Aug. 5.

Reuters reporters were also invited to three WhatsApp groups

with a total membership of more than 2,200 affected employees

and parents, all scrambling to recover their money.

The groups discuss possible next steps, trying to decide

whether campaigns on social media, street protests or legal

action will best help them.

Byju's, which offers services in 21 countries and has 150

million students as members, typically prices its programs from

$100 to $300, many sold on loans.

To drum up attention, parents, worried mostly about clawing

back their payments, have even discussed tagging former Byju's

brand ambassadors, such as Argentine soccer star Lionel Messi.

"We should post on Instagram," said one user in the WhatsApp

group for parents. "We can tag them and show them the reality."

For now, Raveendran is betting against the odds.

"Our company is on the verge of reversing the negative

business cycle that began two years ago, showing clear signs of

recovery," he told staff in a memo on Tuesday.