Byju's, the prominent edutech firm founded by Byju Raveendran in 2011 and valued at $22 billion in 2022, faces a significant challenge as Think and Learn Private Ltd (TLPL), its parent company, has been admitted into the bankruptcy resolution process by the National Company Law Tribunal (NCLT). This decision follows a petition filed by the Board of Control for Cricket in India (BCCI) over Byju's default on a payment amounting to ₹158 crore.
The NCLT, Bengaluru bench, comprised of Judicial Member K. Biswal and Technical Member Manoj Kumar Dubey, appointed Pankaj Srivastava as the interim resolution professional (IRP) to oversee the resolution process. The IRP is expected to provide his written consent within a week and subsequently submit progress reports fortnightly. Byju had unsuccessfully sought to refer the dispute to arbitration, a plea dismissed by the tribunal as "not maintainable."
In response to the tribunal's decision, Byju has expressed its intention to seek an amicable settlement with BCCI while preparing to challenge the NCLT order at the National Company Law Appellate Tribunal. The company remains committed to protecting its interests through legal review and necessary steps.
Earlier this year, Byju encountered internal challenges when foreign investors, including Prosus and Peak XV (formerly Sequoia Capital India), voted to remove Byju Raveendran as CEO citing allegations of mismanagement and failures. Raveendran, in turn, contested these allegations and the validity of the vote.
Under the insolvency proceedings initiated by the NCLT, Byju's assets are frozen, and no fresh suits can be filed against the company. The IRP has been tasked to compile financial claims against Byju and form a Committee of Creditors (CoC), with a mandate to submit a report certifying the constitution of the CoC within 30 days.
The tribunal's 38-page order highlighted Byju's contractual obligations under a 'team sponsor agreement' with BCCI, extending sponsorship of the Indian cricket teams till March 31, 2023. Allegations arose when Byju failed to fulfil payment obligations against invoices for the 2022-23 period, despite permitting BCCI to encash a bank guarantee of ₹143 crore towards dues up to the ICC World Cup 2022.
The developments underscore the critical juncture for Byju, once a stalwart in the edutech industry, as it navigates complex legal challenges and seeks to stabilize its operational and financial trajectory amidst mounting pressures.
This note encapsulates the pivotal aspects of Byju's entry into the bankruptcy resolution process, reflecting its impact on the company's governance, financial obligations, and strategic outlook moving forward.
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