Ronnie Screwvala-backed edtech startup Lido Learning has filed for insolvency and bankruptcy with the Mumbai bench of National Company Law Tribunal, six months after asking over 1,200 employees to resign amid a cash crunch.
Lido Learning’s board of directors has passed a special resolution to file an application under section 10 of Insolvency and Bankruptcy (IBC) code 2016, according to the company’s regulatory filings with the Ministry of Corporate Affairs (MCA).
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Lido failed to pay back debts and has defaulted on payments to former employees. Anil Drolia has been proposed as the Interim Corporate Resolution Professional. News agency Entrackr first reported the development.
Moneycontrol had reported exclusively in May that Lido Learning was yet to pay salaries for the month of January to more than 1,200 employees who were asked to resign abruptly in the first week of February.
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Employees were given a full and final (F&F) settlement letter by Lido, and were verbally told by the HR that they would be getting their salaries by June end. However, most employees have not got even a single rupee yet, employees of the company told Moneycontrol.
Lido, founded in 2019 by former Byju’s vice-president Sahil Sheth, had asked more than 1,200 employees to resign over a video call townhall conference in the first week of February, citing a funding crunch.
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He had told employees that the company was looking to wind down its operations due to a lack of funds and had thus asked them to tender their resignations as soon as possible.
Sheth had also said that all the employees will be getting their salaries in under three months, and the company was looking to sell its assets to be able to fund employees’ salaries.
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To be sure, Sheth’s comments on the funding crunch came just four months after the company had raised $10 million from Ronnie Screwvala’s Unilazer Ventures. Lido Learning also counts Anupam Mittal and Vijay Shekhar Sharma, among others as its backers. Lido’s website is, however, still active and the company is accepting bookings.
Questions sent to Sahil Sheth on mail and WhatsApp remained unanswered.
Lido was reportedly scouting for mergers with other companies. According to sources, Sheth was actively involved in conversations with edtech unicorns like LEAD, but the deal never went through. Forbes had reported in February that Vedantu, Unacademy, Byju’s and Reliance were the frontrunners to acquire Lido Learning.
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While Lido Learning is yet to file its FY22 financial results, the company had reported a loss of Rs 58.8 crore in FY21 on a revenue of Rs 11.3 crore, the company’s filings with the MCA showed.
Lido Learning’s move to file for bankruptcy comes at a time when startups in the country have increasingly started showing signs of distress with funding to the ecosystem slowing down. Recently, Nandan Nilekani-backed ShopX had also filed for bankruptcy.
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Direct-to-consumer edtech companies like Lido, Vedantu, Byju’s and Unacademy are bearing the brunt of it as students have started going back to physical tuition classes with the pandemic situation normalising. Moneycontrol had reported how edtech companies are struggling after the pandemic. Edtech startup Udayy, too, had shut its operations in June, laying off all its employees, Moneycontrol had reported.
