Byju's insolvency: NCLAT stays formation of lenders committee till August 2

NCLAT on Byju Vs BCCI

The National Company Law Appellate Tribunal (NCLAT) on August 1 stayed the formation of Committee of Creditors (CoC) till August 2 on a dispute between Byju Raveendran and the Board of Control for Cricket in India (BCCI) to ensure that the interests of all parties are safeguarded.

The tribunal is expected to rule on the settlement between Raveendran and BCCI on August 2 and the stay is intended 'to protect the interest of all the parties' till an order is passed.

Riju Raveendran, who has agreed to pay Rs. 158 crore to BCCI, appeared through senior advocate Puneet Bali and filed an affidavit and an undertaking. Riju told the court that the money he is paying BCCI is from his personal funds that were generated from the sale of Think and Learn's shares between 2015 and 2018.

Bali said, "Riju earned Rs. 3600 crore from the sale of his shares in the company, he paid income tax of over Rs. 1000 crore on the same." "This is all tax paid money. It is my money, my personal shares, and money that I have infused back into the company. This money is also not part of the $533 million.”

Riju filed the undertaking and the affidavit through his power of attorney holder in India.

The US lenders however objected to both the affidavit and the undertaking alleging that the 'maths did not add up'. Senior advocate Mukul Rohatgi, who appeared for the lender said  “We are left with nothing, these two Raveendrans have voluntarily gone for insolvency in the US. There is nothing on record to show that they have any money. It can't be that there (US) you are a defaulter and here you come to India and say I'll pay.”

Alleging that Byju and Riju Raveedran were both fugitives as they do not live in India anymore, Rohatgi said, “He is a fugitive, there is ED investigation and look out circular against him. He will not pay salaries, PF or rents but he wants a stamp of approval from a tribunal for settlement."

It Rohatgi's contention that the Raveendran brothers are trying to stall the company's insolvency resolution process for six months to erode the value of the company.

The Resolution Professional, who appeared through the lawyer told the NCLAT that Byju Raveendran has refused to share the details of bank accounts and other data. It was further informed that the RP has received over 3000 claims from employees

On July 31, the NCLAT deferred accepting a Rs 158-crore settlement between Byju's founder Byju Raveendran and the Board of Control for Cricket in India (BCCI) after the US-based lenders of the embattled edtech firm questioned the source of money.

Calling it a "tainted settlement", the lenders said it was being paid from “stolen money” and requested the tribunal to reject the agreement.

NCLAT asked Raveendran for an undertaking that the source of the money was not tainted and the Byju’s founder didn’t violate its orders in raising the money.

It also asked the lenders of Think and Learn Private Limited, which operates Byju’s, not to constitute the Committee of Creditors (CoC) for the time being.

The National Company Law Tribunal started bankruptcy proceedings against Think and Learn on July 16 on a BCCI complaint of non-payment of dues worth Rs 158 crore. Raveendran challenged the order in NCLAT.

Lawyers for BCCI and Raveendran told NCLAT that they agreed to settle the dispute. Byju's would pay the Indian cricket board on August 2 and 9, the appellate tribunal was told.

To support his claim of “tainted money”, Rohatgi read out portions of a judgment delivered by a Delaware court in a bankruptcy case against Byju's US entity Byju’s Alpha.

But, Byju's US-based lenders questioned the settlement. “How can someone who cannot even pay salaries pay Rs 150 crore out of the blue?" senior advocate Mukul Rohatgi, who appeared for lenders, said. “Byju and Riju conspired and stole $500 million. It is our money which has been withdrawn by these fellows.”

On July 30, Solicitor General Tushar Mehta, who appeared for BCCI, said "The matter may be heard tomorrow, they are in talks."  NCLAT had moved the hearing by a day.