Byju's escapes insolvency: Rs 158.9 crore BCCI settlement approved, Raveendran back in control

New Delhi: In a significant development for the embattled edtech giant Byju’s, the National Company Law Appellate Tribunal (NCLAT) on Friday approved a ₹158.9 crore settlement with the Board of Control for Cricket in India (BCCI), setting aside the insolvency proceedings that had been initiated against the company. This decision effectively restores Byju Raveendran to control of the firm.

The company hailed the NCLAT order as a "major victory," emphasising that the founders had made substantial personal sacrifices to sustain their business during challenging times. Byju's issued a statement celebrating the ruling, which will pull the company out of the corporate insolvency resolution process and return control to its promoters.

The Chennai bench of the NCLAT stated, "In view of the undertaking given and affidavit filed, the settlement between the parties is hereby approved and as a result, the appeal succeeds and impugned order (passed by the NCLT) is set aside." The tribunal acknowledged that the settlement was reached before the Committee of Creditors (CoC) was formed and confirmed that the payment sources were not in dispute, dismissing allegations made by US-based creditors about the origin of the funds.

However, the NCLAT’s decision comes with a stipulation: any failure to make payments on the agreed dates will result in the revival of insolvency proceedings against Byju's. The tribunal noted that the funds were provided by Riju Raveendran, Byju's brother, through the sale of his shares, with all taxes paid and payments made through proper banking channels.

According to the undertaking, Riju Raveendran had already paid ₹50 crore on July 31, 2024, towards Byju’s dues to the BCCI. An additional ₹25 crore was set to be paid on Friday, with the remaining ₹83 crore to be transferred on August 9 through RTGS. The NCLAT clarified that if there were any breaches of the undertaking, the insolvency proceedings would be automatically reinstated.

The tribunal further dismissed accusations of 'round-tripping'—a term implying suspicious financial transactions—asserting that Byju’s US-based creditors failed to provide evidence to support their claims. The tribunal also considered submissions from Solicitor General of India Tushar Mehta, who represented the BCCI and indicated no objection to the funds if they were clean and came from legitimate sources.

On July 16, the Bengaluru bench of the National Company Law Tribunal (NCLT) had admitted Byju's to insolvency proceedings following a petition by the BCCI over unpaid dues of nearly ₹158.9 crore. This move had led to the suspension of Byju’s board and the appointment of an interim resolution professional to manage the company’s operations, along with a moratorium freezing the company's assets.

Byju Raveendran welcomed the NCLAT’s ruling, describing it as both a legal and personal victory. He expressed gratitude for the sacrifices made by the Byju’s team, who have invested significant personal resources and effort to keep the company afloat amid unprecedented challenges. Raveendran emphasised the dedication of the team, stating, "Our founding team members have poured their hearts and souls, not to mention their entire savings, into this dream, often at great personal cost."

The NCLAT order is also notable for its reference to a compromise as the essence of justice, highlighting the resolution of the dispute as a positive outcome for all parties involved.

It is worth noting that Byju's had a sponsorship agreement with the BCCI starting July 25, 2019, which gave the edtech firm exclusive rights to display its brand on the Indian cricket team’s kit and during broadcasts of cricket series, among other benefits. However, Byju's fell behind on payments after March 31, 2022, with only one invoice for the India-South Africa series paid. The remaining amounts for sponsorships covering various series, including those with South Africa, Australia, Sri Lanka, and New Zealand, as well as other events, went unpaid.

Once valued at USD 22 billion, Byju’s has faced a series of challenges as schools reopened following the easing of pandemic restrictions, leading to a sharp decline in its valuation by BlackRock to USD 1 billion. The company’s difficulties were exacerbated by missed financial reporting deadlines and significant shortfalls in revenue projections. 

In February, a group of investors, including Prosus and Peak XV, called for the removal of Byju Raveendran as CEO at an extraordinary general meeting (EGM) due to allegations of mismanagement. Raveendran has denied these allegations. 

The NCLAT’s ruling not only resolves the immediate financial and legal issues facing Byju's but also marks a crucial step in stabilising the company and restoring control to its original management. PTI