Byju Raveendran filed a caveat with the Supreme Court on August 3 against US-based creditor Glas Trust Company LLC, following an NCLAT order. The NCLAT had restored Byju’s board and overturned insolvency proceedings against the edtech company.
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NEW DELHI: Byju Raveendran has filed a caveat before the Supreme Court against US-based creditor Glas Trust Company LLC regarding an order passed by the National Company Law Appellate Tribunal (NCLAT). This move comes in anticipation of a potential challenge by Glas Trust against the NCLAT’s recent decision, which reinstated Byju’s board and nullified insolvency proceedings.
NCLAT’s Order and Glas Trust’s Opposition
The caveat was filed on August 3, just one day after NCLAT issued an order restoring Byju’s board, effectively setting aside insolvency proceedings initiated over a Rs 158.9 crore debt claim filed by the Board of Control for Cricket in India (BCCI). Glas Trust has contested this settlement, alleging that the funds used by Riju Raveendran, Byju Raveendran’s brother, were “tainted” and involved “round-tripping”.
Ensuring Fair Hearing
Anticipating that Glas Trust would appeal the NCLAT decision in the Supreme Court, Byju Raveendran preemptively filed a caveat. This legal strategy ensures that Byju Raveendran will be heard before any orders are passed regarding the appeal filed by the US-based creditors. A caveat application is a protective measure to ensure that no adverse orders are issued without the filer being given a chance to present their case.
Details of the NCLAT Decision
Last Friday, a two-member NCLAT bench approved the Rs 158.9 crore settlement with BCCI, setting aside the insolvency proceedings against Byju’s. The tribunal noted that the settlement was reached before the Committee of Creditors (CoC) could be formed and clarified that the source of payment was not in dispute.
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The NCLAT stated-
“The origin of the payment is ‘not in dispute’ and is not connected to the foreign funds as claimed by the US-based creditors.”
Payment Details and Dismissal of Allegations
Riju Raveendran paid Rs 50 crore on July 31, 2024, towards Byju’s outstanding dues to BCCI. The remaining payments are scheduled, with Rs 25 crore due on Friday and Rs 83 crore to be paid on August 9 via RTGS. The NCLAT rejected the US-based creditors’ allegations of ’round-tripping,’ stating they failed to provide evidence to support their claims.
Background and Financial Challenges
On July 16, the Bengaluru bench of the National Company Law Tribunal (NCLT) had directed the initiation of Corporate Insolvency Resolution Proceedings (CIRP) against Byju’s, admitting BCCI’s plea under the Insolvency and Bankruptcy Code (IBC) for a default of Rs 158.9 crore by Think & Learn. Byju Raveendran subsequently challenged this order before the NCLAT.
Byju’s, once valued at USD 22 billion, faced significant setbacks with the reopening of schools post-pandemic. BlackRock recently downgraded its valuation to USD 1 billion. The company’s troubles escalated when it missed financial reporting deadlines and fell short of revenue projections by over 50%.
In February, investors in Byju’s parent company, Think & Learn, including Prosus and Peak XV, voted to remove Raveendran as CEO during an extraordinary general meeting, citing “mismanagement and failures”. Raveendran has denied all allegations.
