Byju’s, the once $22Bn valued embattled edtech giant , received a favorable ruling from India’s National Company Law Appellate Tribunal (NCLAT) on Friday. On Friday, the NCLAT overturned the insolvency proceedings initiated against Byju’s and approved a settlement agreement with the Board of Control for Cricket in India (BCCI) amounting to ₹158 crore.
While the NCLAT’s ruling offers relief for the edtech major, it does comes with a caveat. The tribunal stated that any failure by Byju’s to adhere to the payment schedule as outlined in the settlement agreement would result in the automatic reinstatement of the insolvency proceedings. “In view of the undertaking given and affidavit, the settlement between the parties (is) approved and as a result appeal succeeds and impugned order (passed by the NCLT) is set aside,” a two-member Chennai bench revealed in its order in the open court.
The settlement agreement, facilitated by Byju Raveendran’s brother, Riju Ravindran, involves a payment plan to clear the dues owed to the BCCI. As per the undertaking, Riju made an initial payment of ₹50 crore on July 31, followed by an additional ₹25 crore on the day of the ruling. The remaining ₹83 crore is scheduled to be paid by August 9 through Real-Time Gross Settlement (RTGS).
To recap, the insolvency proceedings against Byju’s were initiated by the BCCI due to a default on a sponsorship deal, with the edtech company owing ₹158.9 crore. The Bengaluru bench of the National Company Law Tribunal (NCLT) had earlier directed the commencement of Corporate Insolvency Resolution Proceedings (CIRP) against Byju’s parent company, Think & Learn Pvt. Ltd. This move by the NCLT was a significant setback for Byju’s, effectively placing the company under the management of an interim resolution professional and suspending its board.
One of the critical aspects of the NCLAT’s ruling was the dismissal of allegations of round-tripping made by Byju’s US-based lenders. The tribunal found no evidence to support these claims, clearing Byju’s of accusations that could have further complicated its legal and financial standing. The funds used for the settlement were verified to have come from Riju Ravindran’s personal share sales. “The NCLAT order is not just a legal victory, but a testament to the heroic efforts made by our Byju’s family in the last two years. Our founding team members have poured their hearts and souls, not to mention their entire savings, into this dream, often at great personal cost. Every Byju-ite has demonstrated extraordinary resilience, working tirelessly through unprecedented challenges. Their collective sacrifice humbles me, and I am deeply grateful to each one of them,” Raveendran said.
Despite this legal victory, Byju’s continues to face ongoing financial and legal hurdles. The company is entangled in multiple bankruptcy cases both domestically and internationally. Investors, including Prosus NV, have been actively seeking to remove Byju Raveendran as CEO, and a court ruling has barred him from using funds from a discounted share sale. Additionally, Byju’s is grappling with severe cash flow issues, with reports indicating that several staff members have not received full payments for months. Things are made worse by the international legal pressures that Byju’s is currently facing – earlier this week, a US judge ordered Riju Ravindran to pay $10,000 daily until he assists in locating $533 million that Byju’s is accused of hiding from US lenders.
