NCLT admits BCCI's petition for insolvency against troubled Byju's over Rs 158 crore unpaid dues

The National Company Law Tribunal’s (NCLT’s) Bengaluru bench, on Tuesday, admitted BCCI’s petition seeking insolvency proceedings against troubled edtech firm Byju’s parent Think and Learn Private Limited.

The development comes after BCCI sought to initiate the insolvency proceedings against Byju’s over alleged unpaid dues of Rs 158 crore.

The Bengaluru-based firm had a sponsorship contract with BCCI for the Indian cricket team.

The tribunal also dismissed an application by Byju's to refer the matter to arbitration. The dues cited by BCCI were payable in respect of an agreement with Byju's to sponsor the jerseys of the Indian cricket team.

The NCLT's decision marks the beginning of a Corporate Insolvency Resolution Process (CIRP) for the Bengaluru-based edtech firm.

Who will manage Byju’s during the insolvency process?

The NCLT has appointed Pankaj Srivastava as the interim resolution professional (IRP). He will manage Byju’s until a Committee of Creditors (CoC) is formed.

The IRP will handle the collation of claims against Think and Learn and assess the company's financial position to establish the CoC. The current management will step down, and control will shift to the creditors.

What will happen to Byju’s assets and debts?

During the CIRP, Byju’s assets cannot be transferred, and a moratorium will freeze all debts and interest on debts until lifted by an NCLT order.

The CoC, led by the IRP, has a maximum of 330 days to find a buyer for the company through a bidding process.

If a buyer is found, the company could be revived. If not, the NCLT may order the liquidation of the company.

Can Byju’s appeal the NCLT’s decision?

Byju’s founder, Raveendran, and any board member have the right to appeal the NCLT’s order in the National Company Law Appellate Tribunal (NCLAT) and subsequently in the Supreme Court.

However, lifting the CIRP remains at the court's discretion. Byju’s had requested the dispute be referred to arbitration, but the NCLT dismissed this request.

In addition to the BCCI's claims, other companies like Surfer Technologies Pvt Ltd, Cogent E-services, McGraw Hill Education India, and iEnergizer Services have also raised significant claims against Byju’s.

Byju’s, once India's highest-valued startup, has faced significant financial challenges in recent years. The company ended major branding partnerships in mid-2023 and saw several top-level exits, including its chief financial officer and chief executive for India. Prosus, an investment firm, wrote off its 9.6% stake in Byju’s, valuing it at nearly zero after investing around $500 million over the years.

The financial turmoil has drastically reduced Byju’s valuation from its peak of $22 billion to $225 million, and founder Raveendran’s net worth has plummeted to zero, according to the Forbes Billionaire Index 2024.