US firm alleges in SC it was wrongly removed from CoC by IRP dealing with Byju's insolvency case

New Delhi: US-based creditor Glas Trust Company LLC on Tuesday told the Supreme Court that it has wrongly been removed from the committee of creditors (CoC) by the interim resolution professional (IRP) dealing with the insolvency proceedings against ed-tech firm Byju's.

The submissions were made by senior advocate Kapil Sibal, appearing for the US firm, before a bench comprising Chief Justice D Y Chandrachud and Justices JB Pardiwala and Manoj Misra which commenced the hearing in the keenly contested case.

"I am the guarantor, which has the stakes of Rs 12,000 crore in the firm (Byju’s). My stake is 99.41 per cent and this has been reduced to zero by the IRP," Sibal said, adding that those having the stakes of 0.59 per cent now have 100 per cent.

"I do not want the IRP to proceed," he said.

The US firm said the National Company Law Appellate Tribunal (NCLAT), on the ground that the pleas are pending in the top court, refused to pass any order on its fresh petition against IRP Pankaj Srivastava. Sibal sought a stay on the proceedings at the CoC.

The bench then asked senior advocate Shyam Divan, also appearing for the US firm, to commence arguments in the main case and would resume the hearing on Wednesday.

On September 11, the bench had said it will hear on September 17 the appeal of the US firm against a judgment of the NCLAT, which had stayed insolvency proceedings against Buju’s and approved its Rs 158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI).

Earlier on August 22, the bench had refused to pass an interim order to ensure that the committee of creditors (CoC) does not hold any meeting in pursuance of the insolvency proceedings against the embattled ed-tech firm.

The bench had said the developments, which may take place in the meantime, can be negated if it finds there was no merit in the appeal of the US-based creditor against the judgment of appellate insolvency tribunal NCLAT.

The plea was mentioned earlier too on August 20 by Byju's and the BCCI and the top court had then refused to pass an interim order to restrain the Insolvency Resolution Professional (IRP) from constituting a committee of creditors (CoC) in the insolvency proceedings against the ed-tech firm.

In a major setback to Byju's, the top court had on August 14 stayed the verdict of NCLAT setting aside the insolvency proceedings against the ed-tech major and approving its Rs 158.9 crore dues settlement with the Indian cricket board.

The August 2 verdict of the NCLAT had come as a huge relief for Byju's as it had effectively put its founder Byju Raveendran back in control.

The top court, however, had prima facie termed the NCLAT verdict as "unconscionable" and stayed its operation while issuing notices to Byju's and others on the appeal of the ed-tech firm's US-based creditor against the judgment of the insolvency appellate tribunal.

The case stemmed from Byju's default on a Rs 158.9 crore payment related to a sponsorship deal with the BCCI.

The top court had directed the BCCI to keep a sum of Rs 158 crore it had received from Byju's after a settlement in a separate escrow account till further orders.

"Issue notice. Pending further orders there shall be a stay of the impugned order of August 2 of NCLAT. In the meantime, BCCI shall maintain the amount of Rs 158 crore, which shall be realised in pursuance of a settlement, in a separate escrow account until further orders," the bench had said.

Byju's had entered into a "Team Sponsor Agreement" with the BCCI in 2019. Under the agreement, the ed-tech firm got exclusive rights to display its brand on the Indian cricket team's kit and some other benefits. Byju's had to pay a sponsorship fee. The company met its obligations till the middle of 2022 but defaulted on subsequent payments of Rs 158.9 crore.

After insolvency proceedings were initiated, Byju's entered into a settlement with the BCCI.

On July 16, the Bengaluru bench of the National Company Law Tribunal (NCLT) had admitted 'Think and Learn', Byju's parent company, to the insolvency resolution process on a plea filed by the BCCI over default in payment of outstanding dues of almost Rs 158.9 crore.

While suspending the board of the ed-tech firm, the NCLT had appointed an interim resolution professional to run the operations of the company, suspended the company's board of directors, and brought it under moratorium by freezing its assets.

The US-based lenders suspected that the settlement amount was being diverted from the credit they had extended to Byju's.