Months after it ceased operations and asked all of its employees to resign, edtech player Lido Learning, which was in talks to get acquired by Reliance Industries, has filed for insolvency and bankruptcy with the Mumbai bench of National Company Law Tribunal (NCLT), according to the company’s regulatory filings with the Ministry of Corporate Affairs (MCA).
“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 i.e, initiation of Corporate Insolvency Resolution Process by the corporate applicant, be filed before the National Company Law Tribunal, Mumbai Bench so as to resolve its debts,” read the filings.
This development comes days after the board of Lido Learning passed a resolution to file an application under Section 10 of the Insolvency and Bankruptcy Code, which is the first step to kick-start the insolvency resolution process.
While Lido Learning had grown ever since it was founded in 2019 by Sahil Sheth, it floundered at a time when the edtech sector in India grew by leaps and bounds – that is, over the past two years.
While other India edtech players such as Byju’s rode a pandemic-induced high and took advantage of the unprecedented shift to online learning, Lido Learning encountered financial troubles and clocked a drop in its revenue. The situation deteriorated after its talks with Chinese investors to raise millions in a funding round last year failed to be fruitful because of changes made to India’s FDI rules.
And while it had raised a fair amount of funds – including a $10 million round in September 2021 – it also defaulted on many customer refunds, which resulted in over 50 police complaints against the edtech firm across Delhi, Bengaluru and Haryana. Its fortunes only worsened as cooling investor interest, along with emphasis on profitability, adversely affected the global funding sentiments.
Currently, its financial troubles have reached the point where it is unable to pay both its ex-employees – including the nearly 200 it laid off this February – and teachers, who teach tuition classes from KG-Grade 9 across a variety of subjects. It is also unable to pay off its debts to its customers, lenders, vendors, and sundry creditors, which facilitated its decision to file for insolvency.
“I haven’t received my two months’ salary and incentives amounting to about Rs 86,000 despite the company making multiple commitments to pay in the coming months. I even received my full and final settlement calculations from the human resource department, but the money hasn’t been credited yet,” said Abhinav Kumar, who worked as a senior business development associate at Lido.