Byju’s challenges insolvency order in NCLAT, seeks urgent hearing amid financial turmoil

Byju Raveendran, founder and chief executive of Byju's, on Thursday filed a writ petition before the Karnataka High Court against a National Company Law Tribunal order directing insolvency against the ed-tech firm.

Raveendran has pleaded for the suspension of the NCLT order until the National Company Law Appellate Tribunal decides on the matter, shows a document accessed by Mint.

At the heart of the matter is the NCLT’s 16 June order admitted the Board of Control for Cricket in India's plea initiating a corporate insolvency resolution process against Byju's. The bench admitted the plea and appointed an interim resolution professional to oversee the company's daily affairs until the matter is decided.

Byju’s had in 2019 signed up to have its branding featured on the front of the Indian cricket team’s jersey. In June last year, Byju’s extended its sponsorship rights with BCCI till November. The company had asked the cricket board to encash a ₹140 crore bank guarantee, with another ₹160 crore to be paid in instalments.

Eventually, BCCI dragged Byju's to the bankruptcy court for allegedly defaulting on dues worth ₹158 crore. The NCLT in its order held that the insolvency proceedings were to be initiated as there was sufficient existence of debt and default in payment of its dues.

Aggrieved by the order, last week Raveendran moved the appeals forum challenging the NCLT order. NCLAT has posted the matter for hearing on 29 July.

Senior counsel C.K. Nandakumar appeared for BCCI while senior advocate Abhishek Manu Singhvi represented Raveendran.

“Essentially, they (Byju's) have pressed for a stay on the formation of Committee of Creditors,” said a counsel aware of the matter, speaking on condition of anonymity.

Under India's bankruptcy code, once insolvency is initiated a CoC has to be formed to represent the company's credits during the proceedings.

Raveendran through his counsel argued that Byju's has a balance sheet worth ₹6,000 crore. However, the unnamed counsel mentioned above said that until now Byju's has not even filed its latest balance sheet.

The Karnataka High Court will take up the matter on Friday.

Earlier, Byju's had informed NCLT that it was trying to settle the matter with its creditors. However, after the settlement talks did not fructify NCLT ordered initiation of insolvency proceedings against the company.

Meanwhile, apart from BCCI, Teleperformance Business Services, Surfer Technologies, and OPPO had also dragged the ed-tech firm to initiate insolvency against it after defaulting on various payments.

Earlier this week, the Qatar Investment Authority approached the Karnataka High Court seeking to claim Raveendran's personal assets up to $235.19 million, and prevent him from selling, pledging or transferring his assets.

Once celebrated as the world's largest education technology company and a shining example of India's startup success, Byju's has now become a cautionary tale of financial mismanagement.

The company's value has dramatically decreased from $22 billion to less than $1 billion, with creditors filing lawsuits to recover debts, coaching centers closing due to unpaid rent, and thousands of employees left without salaries.