Byju’s insolvency: Suspended directors challenge NCLT ruling reinstating lenders, cite prejudice

Suspended directors of the bankrupt edtech firm Byju’s have approached the National Company Law Appellate Tribunal (NCLAT), challenging a Bengaluru insolvency court’s decision to reinstate its lenders as financial creditors while failing to rule on its ₹158 crore settlement with the Board of Control for Cricket in India (BCCI).

The petition, filed by suspended director Riju Raveendran and current resolution professional Pankaj Srivastava before the Chennai bench of NCLAT, argues that the National Company Law Tribunal (NCLT) had reserved its 29 January order on both the settlement approval and the lenders’ challenge. However, the tribunal ruled only on the lenders’ plea, leaving the settlement unresolved.

The directors have also objected to the tribunal’s decision to remove the current resolution professional, the appointment of a new RP and reinstate a Committee of Creditors (CoC) comprising Aditya Birla Finance Ltd and Glas Trust Co. LLC.

Read this | Mint Explainer: Why Byju’s creditors have dragged its insolvency professional to court

Senior advocate Arun Kathpalia, representing the directors, suggested that the tribunal’s rulings indicate a possible “nexus” that prejudices the company. Byju’s has now sought a special NCLAT bench to hear its case, with the appellate court set to consider the plea on 6 February.

Why the settlement matters

Had the NCLT approved Byju’s settlement with BCCI, the company could have exited insolvency immediately, restoring control to founder Byju Raveendran. However, with the tribunal’s ruling, the insolvency process remains in force, keeping the company’s management out of the Raveendran brothers’ hands.

Read this | Fresh out of Byju’s clutches, Great Learning turns over a new leaf

As things stand, the CoC in Byju’s insolvency proceedings is dominated by Glas Trust, which holds a 99.41% voting share due to its substantial ₹11,432 crore claim. Aditya Birla Finance and Incred Financial Services hold much smaller stakes, with claims of ₹47 crore (0.41% voting share) and ₹20 crore (0.18% voting share), respectively. ICICI Bank has no verified claims or voting rights.

The BCCI angle

The NCLT had initiated insolvency proceedings against Byju’s on 16 June 2024, after the company defaulted on ₹158 crore owed to the BCCI under a sponsorship deal.

Byju’s had entered the agreement in 2019, securing jersey sponsorship rights for the Indian cricket team. The contract was extended until November 2023, but when the company failed to meet its financial obligations, the BCCI petitioned the NCLT for insolvency proceedings.

Both parties later sought court approval for a settlement, but the NCLT did not issue an order, prompting Byju’s to escalate the matter to the NCLAT in Chennai.

However, the Supreme Court had quashed an earlier settlement on 23 October ruling that it did not follow due process under the Insolvency and Bankruptcy Code (IBC). The court directed both parties to return to the NCLT for fresh proceedings.

On 2 August, the NCLAT dismissed the insolvency case and approved the BCCI settlement after Riju Raveendran raised ₹158 crore to clear the dues, temporarily restoring his family’s control over Byju’s operations. 

However, Glas Trust contested the settlement, arguing that the funds raised were “tainted” and should be allocated to financial creditors. The firm also cited ongoing Enforcement Directorate investigations into Byju’s financial dealings.

Byju Raveendran currently resides in Dubai, while his brother Riju is based in London.

Also read | Out with the board, say angry Byju’s investors

Founded in 2011 by Byju Raveendran and Divya Gokulnath, Byju’s became India’s premier edtech startup, achieving unicorn status and attracting global investors. However, its aggressive expansion has been marred by financial distress, regulatory scrutiny, and disputes with creditors—an astonishing reversal for what was once India’s most celebrated startup.