The National Company Law Tribunal (NCLT) in Bengaluru has accepted the Board of Control for Cricket in India’s (BCCI) request to initiate insolvency proceedings against Think and Learn, the parent company of edtech giant Byju’s. Byju’s sources revealed to the media that they intend to contest the NCLT’s decision. They will appeal to the National Company Law Appellate Tribunal (NCLAT).
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Appointment of Interim Resolution Professional
Following the NCLT’s order, Pankaj Srivastava has been appointed as the interim resolution professional. He will manage Think and Learn until creditors form a Committee of Creditors (CoC). The tribunal also dismissed Byju’s plea for arbitration. They cited established debt and payment defaults as grounds for accepting BCCI’s petition under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016.
Byju’s Seeks Amicable Settlement
A spokesperson for Byju’s expressed the company’s desire to negotiate a settlement with BCCI. The spokesperson said, “As we have always maintained, we wish to reach an amicable settlement with the BCCI and we are confident that, despite this order, a settlement can be reached. In the meantime, our lawyers are reviewing the order and will take necessary steps to protect the company’s interests.”.
Impact of Insolvency Proceedings
With insolvency proceedings underway, control of Think and Learn will transfer from its current management to its creditors. The firm’s assets cannot be transferred while it is under Corporate Insolvency Resolution Process (CIRP). According to IBC regulations, no new suits can be filed against Byju’s, and ongoing cases will be suspended during this period.
Details of BCCI’s Petition
BCCI filed the insolvency plea on September 8, 2023, which was heard on November 28. Following the hearing, the bankruptcy tribunal issued a notice to Byju’s seeking a response. BCCI claimed that Byju’s defaulted on a payment of INR 158 crore. BCCI said, “It is stated that the general notice was issued to Byju’s via email dated January 6, 2023, and the default amount of INR 158 crore, excluding TDS, is reflected.”.
Byju’s Cost-Cutting Measures
In January 2023, Byju’s announced that it would not renew its branding partnerships. This is part of efforts to cut costs and achieve profitability by the next fiscal year. At that time, Byju’s had three major branding deals with the BCCI, ICC (International Cricket Council) and FIFA (Federation Internationale de Football Association).
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CIRP Moratorium and Timeline
Under the CIRP, all debts and interest will be frozen until lifted by the NCLT. The IBC mandates that a firm can be managed by the CoC through the interim resolution professional for up to 330 days. During this period, if the lenders can sell the firm to an interested party through a bidding process, the company could be revived. If no buyer is found within this timeframe, the NCLT will order the company’s liquidation.
About the Author
Mr. Radhesh Tarang Shah, is a management student at Institute of Management, Nirma University. He has a passion for writing articles and poems. He has experience as a financial analyst, author, news writer, marketer and social worker.
