Business

Six months after it shut ops, Lido Learning files for insolvency

Six months after it shut operations owing to a cash crunch, edtech start-up Lido Learning has initiated insolvency and bankruptcy proceedings, a regulatory filing show. The start-up was said to have been exploring merger options as a possible last resort to stay afloat, amid a funding winter for Indian start-ups due to geopolitical tensions and rising inflation.

According to the company’s filing with the Registrar of Companies (RoC) earlier this week, its board has passed a special resolution to file an application under Section 10 of Insolvency and Bankruptcy Code (IBC), 2016. “Resolved that pursuant to Section 10 of the Insolvency & Bankruptcy Code, 2016, considering the facts that the company is unable to pay its debts which are due and there are defaults made by the company, the consent of the shareholders be and is hereby accorded to file an application/petition – initiation of Corporate Insolvency Resolution Process by corporate applicant, be filed before the National Company Law Tribunal, Mumbai Bench so as to resolve its debts,” Lido Learning’s filing read.

The edtech start-up is backed by high-profile investors, including Upgrad founder Ronnie Screwvala, Paytm CEO Vijay Shekhar Sharma, and Shaadi.com’s Anupam Mittal, among others. However, in February, it abruptly stopped its operations, laying off close to 1,000 employees and contractual staff while also leaving tutors, parents, and students in the lurch. Some of the existing investors are said to have flagged the issue of “material information” on financials being withheld from them by the company.

According to reports, Lido was looking at a potential acquisition and was exploring a merger deal with Reliance Industries.

Indian start-ups have faced a crunch in funding since the beginning of the year on the back of geopolitical tensions, rising inflation, and the US Federal Reserve hiking interest rates which saw the value of public and private tech stocks tumbling. Start-ups in the country have collectively fired more than 12,000 people so far, with those in the edtech and e-commerce sector being particularly impacted.

The world’s most valuable edtech start-up, Byju’s, is said to have laid off as many as 2,500 people from across its businesses — including employees from its sales team as well as WhiteHat Jr. and Toppr, two start-ups it had acquired in multi-million dollar deals in the last two years. Its closest rival Unacademy officially maintains to have laid off around 600 employees, primarily from its test preparation business, while impacted employees peg the number to be around 1,000.

For at least three smaller edtech firms, the funding freeze has meant that they have had to shut down operations completely. Apart from Lido Learning, edtech start-ups Udayy and Crejo.Fun, which collectively had to let go of 270 employees, also shut down earlier this year.




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