BYJU’S-BCCI Settlement: SC Rejects Founder’s Appeal Against NCLAT Order

The Supreme Court (SC) yesterday reportedly dismissed BYJU’S cofounder Byju Raveendran’s appeal, which challenged an NCLAT order that ruled that committee of creditors’ (CoC) approval is mandatory for BCCI to withdraw insolvency proceedings against the troubled edtech.

As per Bar and Bench, a bench comprising Justices JB Pardiwala and KV Viswanathan upheld the appellate tribunal’s verdict, and refused to intervene in the matter. 

For context, insolvency proceedings against BYJU’S began after BCCI last year filed a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) to recover dues worth INR 158.90 Cr. However, the troubled edtech later settled the case and the cricket board moved to withdraw the insolvency petition.

However, in April this year, the NCLAT’s Chennai Bench refused to treat the settlement of BCCI’s claim as a pre-CoC settlement and directed it to place its settlement proposal before the CoC of the troubled edtech startup’s parent entity.

The apellate tribunal also reportedly observed that BCCI’s application for withdrawal of insolvency proceedings was filed after the constitution of the CoC and hence required the committee’s approval was necessary under Section 12A of the IBC.

It is pertinent to note that although the BCCI submitted the application for withdrawal with the Interim Resolution Professional (IRP) on August 16 last year, the board specifically instructed the IRP to file the same only after the resolution of an appeal pending before the SC. 

The appeal, in question, refers to the SC, in October last year, allowing a plea filed by a consortium of BYJU’S’ lenders, Glas Trust, that challenged the NCLAT decision to halt insolvency proceedings initiated against BYJU’S based on BCCI’s settlement. The apex court eventually directed the BCCI to approach the NCLT for the settlement.

Subsequently, the CoC was constituted on August 21 last year and the IRP eventually filed the withdrawal application post the SC order on November 14. As such, the cricket board had approached the NCLAT to treat August 16 as the date of filing application, and skip the need for CoC approval to settle the case. 

However, the appellate tribunal held that the date of filing before the adjudicating authority determined applicability of the withdrawal petition, and not the date of submission to the IRP.

The development came on the same day as Aakash, which was acquired by BYJU’S in a cash and stock deal in 2021, suspended the allotment of INR 25 Cr shares to the troubled edtech startup, citing potential non-compliance with foreign exchange rules, the Companies Act, and other guidelines. 

While shares were allotted as planned to other investors like Manipal Group and Beeaar Investco, the funds deposited by BYJU’S are being held in a separate interest-bearing account till NCLT review on the matter. 

Separately, Raveendran is preparing to seek $2.5 Bn in damages from Glas Trust and BYJU’S’ IRP. This came right after a US bankruptcy court, in a default ruling, directed Raveendran to pay $1.07 Bn in connection with a $1.2 Bn term loan B (TLB) raised by BYJU’S in 2021.