Byju's insolvency proceedings took a new turn on Wednesday when The Supreme Court set aside the National Company Law Tribunal (NCLT) order that resolved the insolvency proceedings filed by the Board of Controllers of Cricket in India (BCCI) against the edutech firm for more than Rs 158 crores in settlement.
Reversing the tribunal's verdict, the bench, headed by Chief Justice DY Chandrachud and comprising justices J B Pardiwala and Manoj Misra, ordered fresh adjudication into the matter and directed the nation's cricket board to deposit the settlement amount of Rs 158.9 crore with a committee of creditors.
The NCLAT order was challenged by US-based lender Glas Trust Company LLC. On the eve of India's Independence Day, the nation's top court issued a stay the order by NCLT.
An expensive sponsorship deal
Byju's greatest financial woes came in the form of the July 2019 "Team Sponsor Agreement" with the BCCI . According to the agreement, Byju's was granted exclusive rights to display its brand on the national cricket team's kit, telecast advertising, and access to tickets for BCCI-organized matches for a sponsorship fee.
Byju's met its payment obligations through March 2022 and settled the fees for the India-South Africa series in June 2022. However, from then on, Byju's did not pay invoices. This resulted in a shortfall of a whopping Rs 158.9 crore, triggering insolvency proceedings against the ed-tech firm.
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The National Company Law Tribunal (NCLT) ordered the initiation of corporate insolvency resolution on June 16 this year. The body suspended Byju's board and appointed an interim resolution personnel to manage the edutech firm's financial obligations. However, the premier court of the country put a stop to the order on August 14, directing BCCI to deposit the sum of about 158 Crores in a separate escrow account till further orders.
Major shareholder Riju Ravindran, brother to Byju's founder Byju Raveendran, had then committed to using his personal funds to cover the arrears from the proceeds of the sale of stock in Think & Learn, the parent company of Byju's, from May 2015 thru January 2022.