Editor’s note: This story has been updated to include Deloitte’s resignation as the statutory auditor at BYJU’S.
Deloitte on Thursday said it has resigned as the statutory auditor of BYJU’S with immediate effect, citing a delay by the edtech firm in filing its annual results.
Deloitte, which had been serving as the company’s auditor since April 2020, was appointed for a period of five years to March 31, 2025. Deloitte said the financial statements of the company for the year ended March 31, 2022, were due to be laid before shareholders by Sept 30, 2022.
Deloitte said they have also “not received any communication on the resolution of the audit report modifications in respect of the year ended March 31, 2021; the status of the audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022; and we have not been able to commence the audit as on date.”
“As a result, there will be a significant impact on our ability to plan, deign, perform, and complete the audit,” Deloitte said.
Earlier this month, the lenders of BYJU’S $1.2-billion Term B (TLB) loan said that the company has consistently failed to provide audited financial statements for the fiscal year ending March 31, 2022, as well as complete unaudited financial statements for multiple quarters, in a court complaint dated May 23 reviewed by DealStreetAsia,
As a result, the lenders lack updated financial information on their billion-dollar-plus loan facility, with the most recent verified data being over two years old (as of March 31, 2021), the lenders said.
Following the Deloitte announcement, BYJU’S said it has appointed BDO (MSKA & Associates) as its new auditor for five years.
The announcement from Deloitte comes as GV Ravishankar, a managing director at Peak XV Partners (formerly Sequoia Capital India) who has been an early backer of BYJU’S, is also resigning from the board of the edtech firm, a source familiar with the matter told DealStreetAsia.
The Economic Times was the first to report that Ravishankar, Russell Dreisenstock of Prosus, and Vivian Wu of Chan Zuckerberg have resigned from BYJU’S board. DealStreetAsia could not independently verify the resignations of Dreisenstock and Wu.
A BYJU’S spokesperson said, “A recent media report suggesting the resignations of board members from BYJU’S is entirely speculative. BYJU’S firmly denies these claims and urges media publications to refrain from spreading unverified information or engaging in baseless speculation. Any significant developments or changes within our organisation are shared through official channels and announcements. We request media outlets to rely on verified sources and official statements for accurate information regarding BYJU’S.”
Peak XV Partners did not respond to a request for comment.
The news comes amid rising tensions between the edtech firm and its lenders on repayment of its $1.2-billion Term B loan (TLB).
Struggling with mounting losses and rising layoffs, BYJU’S had been in talks with lenders to make tweaks in covenants of the loan with creditors, including lower coupons and more time to repay.
Earlier this month, BYJU’S filed a complaint in the New York Supreme Court to challenge the accelerated $1.2-billion TLB and disqualify Redwood, alleging that it purchased a significant portion of the loan in violation of TLB terms, primarily engaging in distressed debt trading. The company did not pay the $40 million in interest for the loan.
In response, a group of ad hoc term loan lenders, who collectively own more than 85% of the TLB, issued a statement saying the edtech firm’s lawsuit against them is “meritless” and “simply an effort to avoid complying with its obligations, including making contractually required payments”.
In a court complaint dated May 23 reviewed by DealStreetAsia, the lenders said they were forced to exercise remedies following repeated– and conceded — events of default arising from BYJU’S Alpha’s (and its guarantors’) breaches of multiple covenants within the Credit Agreement, along with their failure to make good on any of their repeated promises to address these Events of Default and the Lenders’ concerns regarding their collateral.
