The Byju's logo.
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Bengaluru: The National Company Law Appellate Tribunal (NCLAT), on Friday, approved the settlement between Byju’s and the Board of Control for Cricket in India (BCCI) of Rs 158.9 crore, hence pulling the beleaguered ed-tech company out of bankruptcy proceedings for the time being.
The relief to the company was given on the basis of an undertaking by Riju Raveendran, brother of founder Byju Raveendran, in which he showed that the source of his funds with which he was repaying BCCI’s dues was his personal money and had nothing to do with the “missing” $533 million claimed by the US-based lenders.
The Chennai Bench of the NCLAT, which is hearing the case, however said that in case there is a breach in the undertaking, the order given on July 16 of putting the company into proceedings under the Insolvency and Bankruptcy Code (IBC), shall automatically revive.
“Byju’s is very much out of bankruptcy. Think and Learn, the entity, is very much out of bankruptcy. The admission order has been set aside,” said an insolvency lawyer connected with the case who did not wish to be named. The source told DH that it was technically a corporate insolvency admission process that stands set aside.
With this, management of the company stands restored to Byju Raveendran and the other directors. In case there is a breach of those payment tranches, then the company will revert back into insolvency.
“This does not necessarily mean that Byju's is completely out of bankruptcy proceedings; it depends on their compliance with the conditions set forth by the NCLAT,” said Sunayana Basu Mallik, Partner at law firm King Stubb & Kasiva.
The insolvency proceedings were brought in by BCCI against Think and Learn Private Ltd. Following this, the assets of Byju’s were frozen and an interim resolution professional (IRP) was appointed to form a Committee of Creditors (CoC). The settlement was reached between the parties before the CoC could be constituted.
GLAS Trust Company LLC, a trust acting on behalf of creditors who are allegedly owed $533 million, challenged the settlement. The American lenders claimed that the money being used to settle with BCCI had been stolen from the “missing” $533 million of the $1.2 billion that they had lent to Byju’s Alpha Inc (Byju’s offshore SPV), of which Riju was then the sole director.
They put forward that the payment by Riju to BCCI is preferential payment over and above the financial creditor which has already filed its claim.