Byju's Insolvency Case: The Supreme Court of India had directed the cricket board (BCCI) to deposit the settlement amount of Rs 158 crore with a committee of creditors
The Board of Control for Cricket in India (BCCI) is likely to seek withdrawal of its insolvency petition against edtech major Byju’s in the National Company Law Tribunal (NCLT), reported CNBC-TV18 report citing sources. The move came after the Supreme Court on October 23 quashed NCLAT’s order allowing Rs 158 crore settlement between the cricket board and the edtech company.
The top court had directed the cricket board to deposit the settlement amount of Rs 158 crore with a committee of creditors. The bench headed by then Chief Justice DY Chandrachud delivered its verdict on an appeal by US firm Glas Trust Company LLC against the NCLAT order.
On August 2, NCLAT’s Chennai bench approved Byju’s founders’ settlement of Rs 158 crore payments owed to BCCI. This verdict had come as a huge relief for Byju’s as it had effectively put its founder Byju Raveendran back in control of the company’s finances and operations.
However, the relied remained short-lived as the apex court termed the NCLAT verdict “unconscionable” on August 14. The matter will now be heard on November 18.
Byju’s lenders have opposed the cricket board’s withdrawal applications saying, “The Committee of Creditors (CoC) needs to be formed and take a decision before any such plea is made”. But the board stated that Rs 158 crore settlement was done with Byju’s before the CoC was formed.
Currently, Byju’s is facing legal troubles at New York courts, the NCLT, NCLAT and the Supreme Court of India over repayment of loans. It all started in June 2023 when the edtech giant missed an interest payment on a $1.2 billion term loan.
Since then, the company has been negotiating with its lenders and US-based creditor Glas Trust who accused the edtech of defaulting on the loan and demanded repayment. However, Byju’s argued that the loan terms were manipulated unfairly.
Of $1.2 billion loan, more than $200 million was spent on marketing including sponsoring soccer’s FIFA World Cup in Qatar in 2022 and securing football player Lionel Messi as brand ambassador, claimed Raveendran in a filing in US Bankruptcy Court in Wilmington, Delware on October 10.
He also mentioned that the amount that was alleged to be transferred offshore to entities linked to Raveendran, was used for a “legitimate commercial purpose”.
During the hearing, Byju’s lenders argued that Raveendran’s brother Riju Ravindran and a Miami-based hedge fund (once was in-charge of the company’s cash) must be held responsible for the transfer of the money.
They disputed that Raveendran and his brother were “engaged in a game of charades” to conceal where the money went, Glas attorney Ravi Subramanian Shankar said in the court.
The lenders attorney alleged that Byju’s had first sent $533 million to a small hedge fund in Miami which then transferred the money to OCI, a UK-based incorporated logistics firm with which the edtech entered into a agreement for international expansion, he added.