Embattled ed-tech firm Byju’s CEO, Byju Raveendran, has said that if an insolvency proceeding is initiated against the company, it will face a total shutdown. This is as per a Reuters report.
In a court appeal at the Karnataka High Court, Raveendran said that vendors might declare default once the insolvency proceedings start, leading to a total shutdown of services, according to the report.
Raveendran's counsel, MZM Legal, filed the 452-page filing, where the company, for the first time, reportedly mentioned how the insolvency will affect its functioning. The ed-tech firm mentioned that it will bring the operations of the company to a grinding halt, according to the report. The case will be heard by the court on Monday.
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The issue arose after the National Company Law Tribunal (NCLT) initiated insolvency proceedings against the ed-tech firm. This was after an insolvency plea was filed by the Board of Control for Cricket in India (BCCI).
At the heart of the dispute is the 'Team Sponsor Agreement' that BCCI and Byju's entered into on July 25, 2019. According to this agreement, Byju's has the exclusive right to display its trademark or brand name on the kit of the Indian cricket team, place advertisements during the telecast of cricket series, and provide hospitality and non-hospitality tickets for every ticketed match organized by BCCI, according to the NCLT order.
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“As consideration, the corporate debtor (Byju's) was required to pay a fee to the operational creditor (BCCI)," it said. "The corporate debtor was the sponsor of the Indian cricket team as per the above arrangements and availed of the services for a period up until March 31, 2023.
After March 31, 2022, Byju's made payment in full only against one invoice for the India-South Africa cricket series held in June 2022, amounting to Rs 25.35 crore, but failed to pay for subsequent invoices.
A bank guarantee of Rs 143 crore was encashed, but that was not sufficient to cover the entire amount. It said adding the sponsorship fee for series and tours, including those of South Africa, Australia, Sri Lanka, and New Zealand, the Asia Cup, and the ICC T20 between August 2022 and January 2023, amounting to Rs 158.9 crore, remained unpaid.
"It cannot be disputed that the corporate debtor has availed the services of the operational creditor," the NCLT order said.
"Corporate Debtor had never disputed the fact that it was required to pay the agreed fee as per the arrangement between the parties. However, despite having acknowledged the dues, the corporate debtor has failed to pay, and instead, the corporate debtor repeatedly kept requesting an extension of time for payment."
(With inputs from PTI)
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