The Supreme Court has raised concerns over why Byju’s, an ed-tech company with a substantial debt of ₹15,000 crore, chose to settle its dues solely with the Board of Control for Cricket in India (BCCI). This settlement was part of a larger insolvency issue involving Byju’s, which is currently under scrutiny. The top court questioned the decision of the National Company Law Appellate Tribunal (NCLAT), which approved the ₹158.9 crore settlement with BCCI without, in the court’s view, fully applying its mind to the broader debt situation.
Background:
- Byju’s Debt: The company is struggling with a debt of ₹15,000 crore.
- BCCI Settlement: Byju’s settled a ₹158.9 crore payment with the BCCI, which had been overdue since the second half of 2022. The deal related to a 2019 sponsorship agreement, granting Byju’s the right to display its brand on the Indian cricket team’s kit.
- NCLAT Ruling: On August 2, 2023, the NCLAT closed insolvency proceedings after the BCCI dues were settled. However, the Supreme Court stayed this decision on August 14 after an appeal from Glas Trust Company LLC, a US-based creditor of Byju’s.
Supreme Court Concerns:
- Partial Settlement: The court expressed doubts about why Byju’s chose to pay off the BCCI alone, given its large overall debt.
- Creditor’s Rights: Glas Trust Company, which holds 99.41% of Byju’s debt, was left out of the settlement process. It argued that the interim resolution professional (IRP) had improperly removed it from the committee of creditors.
- Judicial Review: The court hinted that it might send the case back to the appellate tribunal for reconsideration, as the NCLAT’s approval of the settlement raised questions about fairness and legal due diligence.
Defense by Byju’s:
- Byju’s legal team, led by advocates Abhishek Singhvi and NK Kaul, argued that the settlement money paid to the BCCI came from Riju Raveendran, the brother of Byju Raveendran, using personal assets. They contended that there was nothing wrong with the NCLAT’s decision to close the insolvency case.
The case continues, with the Supreme Court expected to resume hearing arguments soon.
