BCCI initiates insolvency proceedings against online tutor Byju's

By Saikat Das and Sankalp Phartiyal

Byju’s storied founder is losing control of his eponymous company after an Indian court allowed insolvency proceedings to begin against the edtech firm.

The National Company Law Tribunal installed an interim resolution professional to replace Byju Raveendran following a petition from the country’s powerful cricket governing body — Byju’s used to sponsor the national team — and its order on Tuesday invited other creditors, Byju’s employees and vendors to file claims. The “existence of a debt and a default in the payment of debt is clearly established,” the court said Tuesday, adding it found no reason to deny the petition filed by the Board of Control for Cricket in India.

 

“This effectively means that founders and existing Board of Directors lose control of Byju’s,” said Satwinder Singh, managing partner at Aekom Legal. “The resolution professional will now be responsible for carrying out the operations of the company, and keep it as a going concern until the insolvency process is complete.” 

Byju’s, founded by teacher Byju Raveendran, was valued at $22 billion at its peak but ran into financial and legal problems after its business dried up. The plea brought by the cricket board is one of several bankruptcy cases Byju’s is fighting in India and abroad.

Byju’s has the option to appeal the decision, and could halt the insolvency proceedings if it wins a so-called stay order. But for now, insolvency professionals described the likely road ahead: the appointed resolution professional will reach out to Byju’s vendors and creditors, and will form a committee of creditors to determine a future course of action. 

“We wish to reach an amicable settlement with BCCI and we are confident that, despite this order, a settlement can be reached,” a spokesperson for Byju’s said in a statement. “In the meantime, our lawyers are reviewing the order and will take necessary steps to protect the company’s interests.”

In case Byju’s is able to settle its dues, the BCCI can withdraw its application. Or Byju’s can file an application to settle all its dues, which the committee of creditors have to approve with a minimum vote of 90%, according to Sumit Binani, an independent insolvency professional who isn’t involved in the Byju’s proceedings. 

The possibility of a settlement is an open question given that Raveendran had pledged his home as well as those owned by his family members to raise money for paying employees amid a cash crunch.

Given that Byju’s is a technology company there may not be much tangible asset value, but potentially there could be buyers for the brand, Binani said.