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Byju’s Defends, BDO International Resigned After Bankruptcy Proceedings
![Byjus Byjus](https://www.legaleraonline.com/h-upload/2024/09/10/1354376-byju.webp)
Byju’s Defends, BDO International Resigned After Bankruptcy Proceedings
The move will impact the firm's audit of FY23 accounts
Defending its position, ed-tech firm Byju's has stated that it was unable to provide documents requested from the firm's board, as it was suspended due to the insolvency proceedings.
The firm had said that its auditing firm, MSKA Associates, an affiliate of BDO International, resigned (although it was appointed for a five-year term set to end in FY27) because Byju's refused to backdate its financial reports.
Byju’s statement read, "The real reason for BDO's resignation is Byju's firm refusal to backdate its reports, while BDO went to the extent of recommending a firm that could facilitate such an illegal activity.”
However, it was reported that MSKA resigned due to the management's lack of cooperation, difficulty in getting necessary numbers and information for a thorough investigation, and the emergence of an issue that had to be reported to the Ministry of Corporate Affairs (MCA) in accordance with the Companies Act.
MSKA is the second audit firm to step down from Byju's in just over two years, following the resignation of Deloitte Haskins & Sells on 23 June 2023. Deloitte had cited a significant delay by the ed-tech company in providing audited financial statements for the fiscal year.
In the resignation letter, MSKA highlighted a suspicious transaction involving Dubai-based reseller More Ideas General Trading LLC, which was reported to the MCA on 02 September. The transaction concerned the recovery of Rs.1,400 crore from the reseller.
However, Byju’s stressed that the forensic could not be completed due to the initiation of the insolvency proceedings on 16 July 2024.
The statement of the ed-tech firm read, "Regarding the transactions with our Middle East partner, about which BDO sought clarifications in its 17 July email, we wish to clarify that the suspended board and management of Byju's had taken the proactive step of arranging a forensic audit, fully transparent and supervised by BDO, to ensure there were no issues.”
Timeline:
- On 16 June, the National Company Law Tribunal (NCLT) ordered the initiation of insolvency proceedings against Byju's, on a petition by the Board of Control for Cricket in India (BCCI) claiming Rs.158 crore in arrears over a sponsorship deal.
- The founder Byju Raveendran was to settle the dispute with the BCCI after approval by the National Company Law Appellate Tribunal (NCLAT). However, on 14 August, the Supreme Court intervened by keeping the NCLAT order.
- The auditor’s resignation has come when the Bengaluru-based ed-tech firm faces legal battles with lenders, defaults on loans, and valuation markdowns by its existing investors.
- In April, Byju's India chief executive Arjun Mohan left the firm just after six months of taking up the role.
Meanwhile, despite a group of investors demanding the ouster of Byju Raveendran from day-to-day management, he continues as the chief executive, focusing on the company's India operations.