The three-year agreement between Ed-Tech company Byju and football player Lionel Messi to serve as their global brand ambassador has been postponed, the Economic Times said on Monday. The event happened a year after the football player and the firm inked the contract. BYJU's announced in November 2022 that it has signed football player Lionel "Leo" Messi as the first global brand ambassador for its social impact arm, "Education For All."
Messi is the leader of the Argentine football team and a player for Paris Saint-Germain, according to an official statement made by BYJU's back then. He and BYJU's had inked a contract to advance the cause of fair education. The Economic Times revealed a year later that the three-year agreement had been postponed. The football player Messi was apparently signed on for between $5 and $7 million annually.
According to an executive cited in the report, Byju paid Messi for the first year of the contract. It is unclear, though, if Byju intends to renew the agreement over time or if it would end before its entire duration. One of the executives stated, "This is due to the liquidity crisis and other matters of serious concern within the company." As of right now, Byju's has not responded.
The Bollywood actor Shah Rukh Khan's endorsement deal with the company expired in the middle of 2023, and it was not renewed. Industry executives reportedly stated that Khan did not want to be connected to the site because of its ongoing regulatory scrutiny, therefore this was a mutual agreement.
Byju's Issues
According to a Bloomberg article, a court-appointed agent assumed control of the shell firm when Byju's, once among India's most promising software startups, failed on a $1.2 billion loan, forcing the company into bankruptcy in the US. According to sources cited by news agency PTI, on January 25, this year, the bulk of lenders involved in the $1.2 billion Term Loan B (TLB) obtained by BYJU'S filed an insolvency petition with NCLT Bangalore against the business.
The claims were then refuted by BYJU'S as "premature and baseless."
As to the PTI report, the lawsuit was brought by Glas Trust Company, which stands for more than 80% of the lenders involved in the TLB loan, which is approved by institutional lenders rather than banks. The news broke when BYJU's stated that they were in talks with the TLB lenders to pay off the whole debt with money raised from the sales of a few subsidiaries.
"As we have stated before, the validity of lenders' actions, including acceleration of the term loan, is pending and under challenge in several proceedings, including before the New York Supreme Court," a representative for BYJU commented on the petition. Therefore, any actions taken by lenders before NCLT are unjustified and premature."
When interest rates were low in 2021, BYJU'S took out the Term Loan B. In a Delaware court, the lenders challenged the $500 million transfer from BYJU's US-based business BYJU'S Alpha to other corporations. Additionally, the edtech major petitioned the New York Supreme Court to overturn the lenders' demand that Redwood, one of the lenders, be disqualified and pay $1.2 billion immediately.
