The National Company Law Tribunal (NCLT) on July 16 admitted embattled ed-tech company Byju's parent Think and Learn to insolvency resolution process in a plea filed by the Board of Control for Cricket in India (BCCI).
The tribunal has appointed Pankaj Srivastava as the interim resolution professional, in charge of running the company till the lenders form a committee known as the Committee of Creditors.
"The Interim Resolution Professional shall after collation of all the claims received against Think and Learn Pvt Ltd the Corporate Debtor and the
determination of the financial position of the Corporate Debtor constitutes a Committee of Creditors," the order said.
The NCLT also dismissed Byju's request to refer the dispute to arbitration.
Byju's, once celebrated as the world’s largest education technology company and a shining example of India's startup success, has now become a cautionary tale of financial mismanagement. Once valued at an astounding $22 billion, the company's worth has plummeted to less than $1 billion over the years with creditors filing lawsuits to recover debts, coaching centers closing due to unpaid rent, and thousands of employees left hanging without salaries.
Though the former management of Byju's has indicated that they will attempt to settle the dispute with BCCI out of court, they might still have to obtain a stay of this order to be in control of the company.
Also Read | NCLT tells Byju's to pay salaries or face an audit
The NCLT opined that there is no reason to deny the petition filed under section 9 of the Insolvency and Bankruptcy Code (IBC), 2016 by the BCCI to initiate a Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (Byju's) since the existence of a debt and a default in the payment of debt is established.
Also Read | Unacademy's Gaurav Munjal on why Byju Raveendran failed: 'didn't listen, put himself on a pedestal'
What admission to NCLT means for the company?
As per the IBC, the control of the company will now be taken from the current management and will be given to the creditors of the company. Furthermore, no assets of Byju's can be transferred while the company is in CIRP. IBC also prohibits the institution of any suits or pursuing of any existing cases against Byju's.
The company is now under moratorium, which means, all its debts and interest on debts will remain frozen till its lifted by the NCLT through an order. The COC, will now run the company through the IRP/RP for a maximum period of 330 days, if the COC is able to sell the company to an interested party through a bidding process, the company could be revived. However, if the CoC fails to find a buyer in the 330 days, the NCLT will order the company to be liquidated.
Raveendran or any member of the board of the company can appeal against this order in the National Company Law Appellate Tribunal (NCLAT) and at the Supreme Court thereafter. However, lifting the CIRP is purely at the discretion of the court.
The case, which was filed by the BCCI on September 8, 2023, came up for a hearing only on November 28 last year. At the very first hearing, the NCLT issued a notice to Byju’s and sought its response.
Also Read | Byju's seeks 48 hours to decide on undertaking to not sell or pledge assets
According to the order from November 2023, the BCCI claimed that Byju’s had defaulted on a payment of Rs 158 crore. “It is stated that the general notice was issued to Byju’s vide email dated 06.01.2023 and the default amount of Rs 158 crore, excluding TDS as reflected,” the NCLT order from November read.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
