Byju's Insolvency: US-Based Lender Glas Trust Files Appeal Against NCLAT Order
Glas Trust's appeal will be taken up by the Supreme Court on Monday.
US-based Glas Trust Company LLC., representing some lenders of Byju's, has filed an appeal before the Supreme Court against last week's National Company Law Appellate Tribunal order that approved the settlement between the beleaguered firm and the Board of Control for Cricket in India.
The appeal was mentioned before the top court on Friday and it will be taken up on Monday.
Earlier this month, the NCLAT approved Byju's settlement with 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 the 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 syphoned from them and its source was questionable.
The insolvency resolution process against the beleaguered Byju's was initiated in July, following Byju'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 Aug. 2022 to Jan. 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%.
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.
