Byju's Set To Exit Insolvency As NCLAT Approves Settlement With BCCI

Troubled ed-tech company Byju's is set to exit insolvency after the National Company Law Appellate Tribunal on Friday approved the ed-tech firm to settle the case with Board of Control for Cricket in India.

The beleaguered company has committed to settling its dues with the BCCI by next week, with payments scheduled for Aug. 2 and Aug. 9. The settlement amount will be paid by Riju Raveendran, brother of Byju's Raveendran and a major shareholder in the company. The tribunal has also said that if the said payment is not made as per the settlement proposal, the insolvency order will remain.

However, the US based lenders had alleged that the money being used for the said settlement is siphoned from them and its source is questionable. Due to this, the appellate tribunal had asked the ed-tech company to submit an undertaking that Riju's funds are legible and not laundered.

The undertaking was submitted in the previous hearing.

The appellate tribunal was hearing Byju Raveendran's petition challenging the initiation of insolvency proceedings against Think & Learn Pvt., Byju's parent company.

The Bengaluru bench of the National Company Law Tribunal had initiated corporate insolvency resolution proceedings against Think & Learn Pvt. on July 16, following Byju's default on a Rs 158.9 crore payment to the BCCI. As a result, the NCLT suspended the company's board and appointed an interim resolution professional to manage its debts.

Byju's, once valued at $22 billion, has experienced a sharp decline, worsened by the reopening of schools after the Covid-19 pandemic, which reduced the demand for its online education services. In January, BlackRock reduced Byju's valuation to $1 billion.

The company's troubles began two years ago when it missed financial reporting deadlines and failed to meet revenue projections by more than 50%. In February, a group of investors, including Prosus and Peak XV, attempted to remove Raveendran during an extraordinary general meeting, citing allegations of mismanagement and failure. Raveendran has denied these allegations and contested the validity of the vote.

A key issue in Byju's financial problems is the "Team Sponsor Agreement" with the BCCI, established on July 2019. This agreement granted Byju exclusive rights to display its brand on the Indian cricket team's kit, advertise during cricket telecasts, and receive tickets for every BCCI-organized match. In exchange, Byju had to pay a sponsorship fee to the BCCI.

Byju's met its payment obligations only until March 2022 and fully paid for the India-South Africa series in June 2022. However, it failed to settle subsequent invoices, resulting in a shortfall even after a bank guarantee of Rs 143 crore was encashed. The unpaid sponsorship fees for various series and tours from August 2022 to January 2023 amount to Rs 158.9 crore.

The NCLT order pointed out that Byju's had utilised the BCCI's services but failed to meet its financial commitments, pushing the company further into insolvency.