Pratik Das, Pune
Byju Raveendran- the founder and CEO of Byju’s, along with his management team, may lose control over the company’s operations following a recent decision by the National Company Law Tribunal (NCLT). On Tuesday, the NCLT appointed an insolvency resolution professional after admitting the Board of Control for Cricket in India’s (BCCI) petition. The BCCI filed for insolvency against Byju’s, claiming that the company defaulted on dues amounting to ₹158 crore. This marks the first ruling in this case.
The bench believes there is no justification for denying the petition filed under Section 9 of the IBC (Insolvency and Bankruptcy), 2016 by the Operational Creditor (BCCI) to start the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (Byju’s), as the debt and default in payment are clearly proven.
Pankaj Srivastava has been appointed as the interim resolution professional to manage the company’s daily operations. While admitting the insolvency petition, the bench noted that the application for arbitration referral is not maintainable.
In September, the BCCI filed an application with the Bengaluru bench of the NCLT against Byju’s parent company, Think & Learn Pvt Ltd, for defaulting on dues amounting to ₹158 crore. The dispute centers around the sponsorship rights for the Indian cricket team’s jerseys. In November, the tribunal decided to hear the case based on its merits.
In January, Byju’s submitted an application to the NCLT, requesting the court to issue directions under Section 8 of the Arbitration and Conciliation Act, 1996, to refer the parties involved in the dispute to arbitration.
The BCCI argued that its claims stem from a purported agreement containing a valid arbitration clause under Section 19. Consequently, the matter should be referred to arbitration by the NCLT. As an operational creditor to the ed-tech firm, the cricket board filed a Section 9 application under the IBC, 2016. Section 9 permits an operational creditor to initiate an insolvency case against a corporate debtor for defaulting on payment of dues.
Since 2019, the ed-tech firm has been a partner of the Indian cricket team, with its branding displayed on the front of the team’s jersey. In June of the previous year, Byju’s extended its sponsorship agreement with the BCCI until November 2023.The company requested the cricket board to cash a ₹140 crore bank guarantee and proposed to pay the remaining ₹160 crore in installments.
According to the order, Byju’s never contested its obligation to pay the agreed fee as per the arrangement with the BCCI. “However, despite acknowledging the dues, the Corporate Debtor has failed to pay and repeatedly requested the BCCI for extensions,” the 38-page order stated.
In November, Byju’s suggested potential settlement discussions. However, due to a severe financial crisis, the company was unable to repay its debts to creditors.
Meanwhile, on Tuesday, the NCLT forwarded the case of oppression and mismanagement filed by investors MIH Edtech and General Atlantic against Byju’s to a division bench for necessary rulings.
On Monday, Surfer Technologies notified the tribunal that it had achieved a settlement with Byju’s, possibly resulting in the dismissal of the insolvency case against the edtech firm.