 "NCLAT defers edtech major Byju's, BCCI settlement after lender alert")
The Board of Control for Cricket in India (BCCI) on Wednesday informed the National Company Law Appellate Tribunal (NCLAT) that it has arrived at a settlement with Byju's about the payment of Rs 158.90 crore in dues that the edtech firm owes to the cricket body. These dues are related to cricket jersey sponsorship deals.
Following the submission, the Chennai Bench of the NCLAT deferred the formation of Committee of Creditors (CoC) till August 1, when the case will be heard again. The Bench did not pass an order on the matter as a group of US-based lenders opposed the settlement, claiming that the money belongs to them and not Byju Raveendran.
The NCLAT was told that Riju Raveendran, the brother of Byju's founder Byju Raveendran, had paid BCCI Rs 50 crore on Tuesday, according to law platform Bar & Bench. The appellate tribunal was also told that an additional Rs 25 crore will be paid by Friday (August 2) and the remaining amount by August 9.
US-based lenders of Byju’s strongly opposed the settlement. They told the NCLAT that the payment is tainted and being funded with stolen money. Senior advocate Mukul Rohatgi, who appeared for the lenders, alleged that both Byju Raveendran and Riju Raveendran conspired to siphon off over Rs 500 crore, as per the findings of a US court.
“How can someone, who cannot even pay salaries, pay over Rs 150 crore out of the blue,” asked Rohatgi. “It is our money that has been withdrawn by these fellows,” he added.
To support his allegations, Rohatgi read out portions of a judgment delivered by a Delaware court in a bankruptcy case against Byju's US entity Byju’s Alpha. He contended that amid a financial crisis, Byju Raveendran has now absconded to Dubai.
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The US lenders have alleged that Byju’s founders unlawfully diverted $533 million in loan proceeds, the whereabouts of which are still unknown.
When NCLAT asked Rohatgi if he was assuming that the payment amount to BCCI was part of the missing $533 million, he said “yes” and questioned if the money had been taken out of an official bank account.
The missing money is at the heart of a fight between US lenders and Think & Learn, the parent company of Byju's learning app. The two sides are battling in courts in Delaware and New York, a Bloomberg report said.
Solicitor General Tushar Mehta, who also appeared for the BCCI, said the creditors’ concerns were based on assumptions, according to Bar & Bench.
The lenders urged the NCLAT to direct Byju's to file an undertaking that the money being paid to BCCI is not Byju Raveendran's.
Byju Raveendran's counsel Arun Kathpalia replied that some assurance should be given to ensure that the insolvency process against Byju's does not come in the way of the proposed settlement.
The NCLAT asked the interim resolution professional (IRP), appointed to oversee the insolvency proceedings against Byju’s, whether constitution of the committee of creditors (CoC) can be put on hold. The appellate tribunal then adjourned the hearing till August 1. It also asked Byju's to file an undertaking to clarify that money due to financial creditors will not be used to pay operational creditors (such as the BCCI).
On July 16, the National Company Law Tribunal (NCLT) had admitted Byju’s into the Corporate Insolvency Resolution Process (CIRP) based on a petition filed by the BCCI due to unpaid dues amounting to Rs 158.90 crore.
Owing to the NCLT’s order, Byju Raveendran lost immediate control of the company. The tribunal appointed a bankruptcy professional to oversee daily operations during the proceedings. On July 23, Byju Raveendran moved NCLAT, seeking an urgent hearing in the matter.
Case highlights
Mar 2019: Byju's signs jersey sponsorship agreement with BCCI for three yearsJun 2022: Company renews contractNov 2022: Byju’s seeks to terminate the contract due to fund crunchSept 2023: BCCI initiates insolvency proceedings against Byju’s for defaulting on Rs 158 crore dues