Today, On 6th September, The Supreme Court agreed to hear a plea concerning insolvency proceedings against ed-tech company Byju’s. The case involves the firm’s financial difficulties, which have raised concerns about its solvency. The plea brought forward to address the ongoing issues related to Byju’s debt and repayment challenges.
New Delhi: The Supreme Court on Friday agreed to schedule an early hearing for the appeal filed by U.S.-based creditor Glas Trust Company LLC, challenging a decision by the National Company Law Appellate Tribunal (NCLAT).
The NCLAT had stayed insolvency proceedings against the ed-tech company BYJU’s and approved its settlement of Rs. 158.9 crore dues with the BCCI.
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A bench led by Chief Justice D.Y. Chandrachud, along with Justices J.B. Pardiwala and Manoj Misra, approached by senior advocate NK Kaul, representing BYJU’s, who emphasized the need for an expedited hearing.
Kaul argued,
“The only funding was done by the promoters, and no external borrowing has been made. We must demonstrate today how malafide the petition [by the U.S. firm] is.”
The Chief Justice, recovering from quarantine, responded,
“I will get it listed as early as possible.”
Senior advocate Kapil Sibal, representing Glas Trust Company LLC, also expressed the need for a prompt hearing.
Previously, on August 22, the bench declined to issue an interim order preventing the Committee of Creditors (CoC) from convening a meeting related to the insolvency proceedings against BYJU’s.
The plea was set for a final hearing on August 27.
The bench noted that any developments occurring in the meantime could be nullified if it ultimately finds no merit in the U.S.-based creditor’s appeal against the NCLAT judgment. The appeal had been previously mentioned by Byju’s and the BCCI on August 20, but the Supreme Court declined to issue an interim order preventing the Insolvency Resolution Professional (IRP) from forming a Committee of Creditors (CoC) in the ongoing insolvency proceedings against the ed-tech company.
In a significant setback for Byju’s, the Supreme Court on August 14 stayed the NCLAT’s verdict, which had not only dismissed the insolvency proceedings but also approved the company’s Rs. 158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI).
The NCLAT’s August 2 ruling had been a substantial relief for Byju’s, as it reinstated its founder, Byju Raveendran, back in control of the company. However, the Supreme Court, after a preliminary review, described the NCLAT judgment as “unconscionable” and stayed its enforcement while issuing notices to Byju’s and other parties in response to the U.S. creditor’s appeal.
The case arose from Byju’s default on a Rs. 158.9 crore payment tied to a sponsorship agreement with the BCCI. The Supreme Court had instructed the BCCI to hold the Rs.158 crore received from Byju’s, following a settlement, in a separate escrow account until further orders.
The bench stated,
“Issue notice. Pending further orders, there shall be a stay on the August 2 order of NCLAT. In the meantime, BCCI shall maintain the amount of Rs.158 crore, realized from the settlement, in a separate escrow account until further orders,”
The NCLAT earlier approved Byju’s Rs.158.9 crore settlement with the BCCI and dismissed the insolvency proceedings against the ed-tech firm.
Byju’s had signed a “Team Sponsor Agreement” with the BCCI in 2019, which gave the company exclusive rights to display its branding on the Indian cricket team’s kit, among other benefits. Byju’s met its sponsorship obligations until mid-2022 but failed to make subsequent payments of Rs.158.9 crore. Following the default, insolvency proceedings were initiated, and Byju’s entered into a settlement with the BCCI.
On July 16, the Bengaluru bench of the National Company Law Tribunal (NCLT) admitted Byju’s parent company, Think and Learn, into insolvency resolution after the BCCI filed a plea over the unpaid dues. The NCLT suspended the company’s board, appointed an interim resolution professional, and froze its assets under a moratorium.
The U.S. based lenders raised concerns that the settlement funds were being diverted from the credit they had extended to Byju’s.
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