Byju's averts insolvency proceedings as NCLAT allows settlement with BCCI

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) on Friday approved the settlement by the founders of edtech firm Byju’s of the Rs 158 crore payment arrears with the Board of Control for Cricket in India (BCCI). This helps founder Byju Raveendran avoid bankruptcy for the cash-strapped firm that’s also battling multiple investor cases in India as well as in the US.

However, sources said Glas Trust Company LLC, which represents the US lenders, is likely to appeal against the NCLAT order in the Supreme Court. On Friday, the NCLAT decided not to consider Glas Trust Company LLC’s petition since the NCLT has already granted them the right to revive their petition and initiate corporate restructuring plan (CRP) proceedings for recovering their dues. Byju’s had raised $1.2 billion in term loans from these lenders.

On Thursday, Glas Trust filed a petition in the US seeking an injunction to stop Riju Raveendran from accessing his funds.

BCCI had moved the NCLT seeking to recover dues through a bankruptcy proceeding against the troubled edtech firm. For now, founder Byju Raveendran will get back control of the firm. However, if there is a breach of the founder's undertaking, the insolvency order of the National Company Law Tribunal (NCLT) on July 16 will automatically be revived, said NCLAT.

“The settlement is being arrived at between the parties before the committee of creditors (COC) could have been constituted. The source of money which is being offered by ex-promoter of Byju’s Riju Ravindran is not in dispute and the interest of the applicant (Glas Trust) has already been safeguarded…the settlement has been approved,” said Justice Rakesh Kumar Jain.

"The NCLAT rejected allegations made by certain US-based lenders that the source of the money being used to settle the BCCI dues was not transparent or trustworthy,” the company said in a statement.

The NCLAT order is “not just a legal victory but a testament to the heroic” efforts of Byju's family over the last two years, the company added.

While a group of investors has been seeking Raveendran’s removal from the daily affairs of the firm, he remains the CEO and is further closely looking at the India operations following India CEO Arjun Mohan’s exit.

"IBC proceedings are designed to safeguard the interest of the companies and not kill the company. The NCLAT today, by way of its order has accepted the settlement between the parties and infused hope into its restoration and growth," Zulfiquar Memon, Byju's counsel, told ET separately.

The counsel representing US lenders had objected to the money paid by Riju Ravindran following which the NCLAT asked the founders’ counsel to provide an undertaking disclosing the source of the funds being paid to the BCCI.

The lenders had also filed a bankruptcy case in the US against a Byju’s subsidiary, alleging that Byju Raveendran had diverted more than half a billion dollars from the $1.2 billion they had lent.

On Thursday, Riju Ravindran’s counsel informed the bankruptcy appellate tribunal that he is using his personal funds to settle the company’s payment arrears with the BCCI. This money has been raised by Riju Ravindran through the sale of shares in Byju’s parent company, Think & Learn, from May 2015 to January 2022.

No part of the settlement money has come from the term loan the company had raised from the US lenders opposing the settlement deal with the BCCI, Riju Ravindran’s counsel said.

On Wednesday, Byju Raveendran’s counsel, Arun Kathpalia, told the appellate tribunal that part of the settlement amount was already paid to the cricket board on Tuesday and that the rest would be paid in two instalments on August 2 and 9.