Byju's Insolvency Process To Continue, Creditors Emerge Victorious
The top court said that the NCLAT did not provide adequate reasoning while approving Byju's settlement with the BCCI and iterated that the due process of law was not followed.
The Supreme Court on Wednesday set aside an order of the National Company Law Appellate Tribunal that put an end to the ed-tech firm's insolvency process.
In essence, the insolvency process of the embattled firm is set to continue.
The top court said that the NCLAT did not provide adequate reasoning while approving Byju's settlement with the BCCI and iterated that the due process of law was not followed.
The court directed that the settlement amount of Rs 158 crore is to be deposited with the committee of creditors, or the CoC, and the said amount is to be kept in an escrow account.
The apex court refused to comment on the merits of the case, which has been sent back to the National Company Law Tribunal for fresh adjudication.
On Aug. 14, the top court ordered a stay on the National Company Law Appellate Tribunal's approval of Byju's settlement with the Board of Control for Cricket in India over dues to the tune of Rs 158 crore.
In effect, the top court’s order meant that the insolvency process, which was brought to a halt by the NCLAT, stood revived.
On Aug. 2, the NCLAT approved Byju's settlement with the BCCI, putting an end to its insolvency process. According to the settlement, Byju's committed to settling its dues with the BCCI, with payments scheduled for Aug. 2 and Aug. 9.
Approving the settlement, the NCLAT said that if payments are not made according to schedule, the insolvency process will be resumed.
This prompted the US-based lenders, represented by Glas Trust LLC, to move the apex court against the NCLAT approved settlement, based on the allegation that the money used for the said settlement was syphoned from them and its sources are questionable.
In addition, it is Glas' contention that Byju’s owes its lenders over Rs 8,000 crore and that the NCLAT ended the insolvency process following a small settlement of Rs 158 crore between Byju’s and the BCCI.
Post the revival of the insolvency process and the subsequent formation of the committee of creditors, the US-based lenders were removed from the committee even after establishing that their voting share in the CoC by value is 99.41%.
Crucially, the Delaware Supreme Court has backed the US-based lenders over a $1.2 billion loan default by the ed-tech firm.
