Relief For BYJU’S As NCLAT Allows Settlement With BCCI; Sets Aside Insolvency Proceedings

After a series of delays, the National Company Law Appellate Tribunal (NCLAT) has finally ruled in favour of embattled edtech startup BYJU’S founder and CEO Byju Raveendran.

Today (August 2), the appellate tribunal dissolved the insolvency resolutions process admitted by the National Company Law Tribunal (NCLT) earlier in July. With this, Raveendran as well as other directors are set to regain control of the company. 

The NCLAT accepted the settlement arrived between Raveendran and the Board of Control for Cricket in India (BCCI) which will see the former pay INR 158 Cr owed to the latter. 

It is pertinent to note that the verdict was supposed to come in today but got postponed after the embattled edtech startup’s US-based lenders raised allegations, questioning the source of the capital.

In its verdict, the tribunal admitted that the funds that Think and Learn (BYJU’S parent) is paying back to BCCI is being paid by director Riju Ravindran without any external credit as there wasn’t any contrary evidence. It also said that the settlement arrangement could have been arrived at before moving NCLAT’s Committee of Creditors (CoC). 

“The first hour of justice is the hour of compromise and where the offer has been made by one of the suspended directors at the behest of the CD to bury the hatchet with CD, the Court can invoke Rule 11 for the purpose of exploring a settlement. In view of these facts, the settlement is hereby approved and the appeal succeeds and the impugned order is set aside,” the tribunal’s ruling over the matter read as per Bar and Bench. 

On the US based lenders’ allegations of the money in question being stolen, counsel appearing for Raveendran and Ravindran said that the former had secured the money back in 2015-16 and has paid INR 1,050 Cr tax to this. 

Further, the counsel also accused GlasTrust (appearing for the US based lenders) of ‘forum shopping’ in trying to approach a US Court in Delaware and making references to the ongoing NCLAT proceedings.

Interestingly, Raveendran hasn’t been cleared from the US lenders’ debt in the US. Yesterday, US Bankruptcy Court of Delaware’s Judge Brendan Shannon ordered Ravindran to pay $10,000 a day until he helps locate $533 Mn that his company is accused of hiding from US lenders.

Now, with the NCLT insolvency admission for the BCCI case being dissolved, the US based lenders may make a fresh appeal in front of the tribunal. Last month, the Bengaluru bench of the NCLT disposed of the insolvency plea filed by the US-based lenders and asked them to put forth their claims before the interim resolution professional (IRP) appointed for the company. 

In its order, the Tribunal also granted GLAS Trust the liberty to seek restoration of its petition, “depending on the subsequent developments in the matter at the Appellate level”.