Byju's Insolvency: Supreme Court Stays Appellate Tribunal Order That Approved BCCI Settlement

The Supreme Court on Wednesday 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 essence, the NCLAT order had put an end to Byju's insolvency process, and the top court's stay on it means that the insolvency process has been revived.

The top court will hear US-based Glas Trust Co.'s appeal against the NCLAT order on Aug. 23.

In the meantime, the top court has directed the BCCI to keep Rs 158 crore that it has received from Byju's in a separate escrow account.

On repeated pleas by the counsel for the BCCI to not stay the NCLAT order, the top court remarked that it was an 'unconscionable' order and it had to be stayed.

BCCI's counsel remarked that the top court has passed the order without even giving them an opportunity to put forward their stand on the issue.

Appearing for US-based Glas Trust, senior advocate Shyam Divan told the court that Byju's owes them nearly Rs 8,500 crore in unpaid dues and that the NCLAT order approving the settlement goes against the law.

Divan said that the NCLAT cannot use its inherent powers to go against a statute. "If a settlement has to be reached, it has to be done so by making an application to the NCLT."

Earlier this month, 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 had said that if payments are not made according to the schedule, the insolvency process will be resumed.

The US-based lenders were opposing the settlement because it was alleged that the money being used for the said settlement was siphoned from them and its source was questionable.

The insolvency resolution process against beleaguered Byju's was initiated in July, following the edtech's default on a Rs 158.9-crore payment to the BCCI.

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

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

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%.