Blow on Byju: NCLAT grants creditors final settlement with the cricket committee’s Rs 15.8 billion.
New Delhi: National Corporate Legal Appeal Tribunal (NCLAT) dismissed Riju Raveendran’s plea, the lawyer suspended bankrupt EDTECH company Byju’s to prevent its creditors from deciding ₹Rs 15.8 crore settlement with Indian Cricket Council.
NCLAT’s Chennai decision on the bench dealt a major blow to Riju and founder Byju Raveendran as it effectively gives creditors all the power to determine the fate of fate ₹The 1.58 million settlement prevents the initiator from making decisions on this issue. The Creditors Committee (COC) is dominated by creditors who oppose the settlement.
Riju Raveendran’s plea challenged the February 10 order, a Bengaluru substitute for the National Corporate Court Tribunal (NCLT), which directed the Cricket Control Board of India (BCCI) to submit the settlement plan to COC approval to facilitate Byju Byju Byju Byju’s efforts from the scope of internal science.
The Supreme Bankruptcy Court insists that the NCLT order is now accepted or rejected within the jurisdiction of the Commission as the COC has already formed when the settlement offer is made.
The key entities between creditors are Glas Trust LLC and Aditya Birla Finance, who now have the power to determine whether BYJU can withdraw from bankruptcy through a proposed out-of-court solution.
Glas Trust, based on its acknowledged claims, has a 99.41% voting share in the COC ₹114.32 million. The remaining members include Aditya Birla’s finances ₹470 million claims (0.41%) and Incess Financial Services Ltd with ₹200 million (0.18%).
Under the current bankruptcy process, BYJU resolution professional Shailendra Ajmera must make a settlement proposal to the COC. If at least 66% of the voters approve the proposal, the proposal can be submitted to the NCLT for final sanctions. Under Section 12A (IBC), if the COC grants majority consent, the court must approve the withdrawal of the bankruptcy proceedings.
However, ensuring approval can be difficult. The Glas Trust opposes the settlement and claims that the funds used to pay BCCI are “contaminated”, believing that the money should be used first to pay creditors’ membership fees.
Convincing the dominant creditor to turn its stance will be a huge challenge for the moratorium to lift the company out of bankruptcy proceedings.
However, the BYJU brothers now have the option to contact the Supreme Court to disengage creditors and resolve the policy.
Please read also: As Byju’s Burnt private investors become Cagey, Edtech startups adopt IPO route to grow
Timeline of events
BYJU’s bankruptcy case was triggered on June 16, 2024, and the company defaulted on ₹Pay 1.58 million to BCCI under the sponsorship agreement in Jersey. Major Edtech signed the deal in 2019, extending it to November 2023, but the payment failed to cause BCCI to initiate bankruptcy proceedings.
Riju raveendran lifted ₹Rs 158 crore to clear the membership fees of BCCI, both parties seek a court-approved solution. On August 2, 2024, NCLAT allowed the withdrawal of the bankruptcy case and restored the company’s temporary control to the Raveendran family.
However, the Glas Trust challenged the ruling in the Supreme Court, believing that the funds should be finance creditors rather than BCCI. On October 23, the Supreme Court overturned the NCLAT order, saying it violated due process under the IBC and sent the matter back to the NCLT for a new ruling.
Byju Raveendran currently lives in Dubai, while Riju is headquartered in London.
Founded in 2011 by Byju Raveendran and Divya Gokulnath, Byju’s became India’s most valuable Edtech startup, attracting Marquee global investors and reaching a unicorn status. But years of active expansion has led to financial distress, regulatory scrutiny and deepening conflict with creditors, marking a grace fall from one of India’s most famous startups.
