SC Revives Insolvency Plea Against BYJU’S

In a major win for BYJU’S aggrieved US based lenders, the Supreme Court today (August 14) revived the insolvency proceedings against the embattled startup. 

An SC bench, led by Chief Justice DY Chandrachud and comprising of justices JB Pardiwala and Manoj Mishra, quashed the National Company Law Appellate Tribunal (NCLAT) order that approved the settlement of the INR 158.9 Cr unpaid dues BYJU’S owed to the Board of Control for Cricket in India (BCCI) thus dissolving the insolvency proceedings. 

The development was reported by PTI and the order has not been reviewed by Inc42. BYJU’S declined to comment on the development. 

The order came as a result of Glas Trust Company, a consortium of the startup’s aggrieved US-based lenders, moving the SC to retrieve the dues owed to them by BYJU’S. The SC agreed to hear the lenders’ appeal today during the court proceedings.

Setting aside the NCLAT verdict, the SC bench issued notices to the startup on a plea of US-based creditor against the verdict. The bench also ordered the BCCI to keep the money retrieved from the startup in a separate account. 

Appearing for BCCI, Solicitor General Tushar Mehta opposed the appeal against the NCLAT order saying that the stay will effectively dissolve the settlement. 

With this, the command of the company has been stripped away from its founder and CEO Byju Ravindran and board and given to a court appointed insolvency professional. 

Glas Trust represents over 100 lenders who provided money to the US-based entity of BYJU’S, which is currently struggling with bankruptcy hearings at a court in Delaware. BYJU’S had stood a guarantee for the loan of $1.2 Bn (about INR 8K Cr).

While the National Company Law Tribunal (NCLT) had earlier ordered the initiation of the corporate insolvency resolution process (CIRP) against BYJU’S, the two parties settled their dispute in front of the NCLAT. 

During the appellate tribunal hearing, the US based lenders contested the verdict saying that the money that Riju Ravindran is using to pay BCCI is from the capital owed to them. 

It is pertinent to note that the NCLT had earlier set aside Glas’ insolvency plea, citing the admission of BCCI’s plea. In its order on July 16, the NCLT gave Glas Trust the liberty to seek restoration of its petition, “depending on the subsequent developments in the matter at the Appellate level”.

The developments at the apex court add another layer to the ongoing spiral down of the edtech startup, which was once valued at $22 Bn. With bankruptcy proceedings being revived at the apex court level, it would be interesting to note the next plan of action for the edtech startup.

Besides fighting the legal hurdles, the startup is facing a number of issues on several other fronts. From delays in filing financial statements, mounting losses, and multiple insolvency proceedings to regulatory scrutiny, layoffs, and a severe cash crunch, there seems to be no end to BYJU’S troubles.