Byju’s, the prominent ed-tech firm, has reportedly filed an appeal with the National Company Law Appellate Tribunal (NCLAT) to contest a recent decision by the National Company Law Tribunal (NCLT). This decision admitted a plea from the Board of Control for Cricket in India (BCCI) to initiate insolvency proceedings against Byju’s. Sources close to the matter revealed that Byju’s is requesting an expedited hearing on the case, though the company has yet to publicly comment on the issue.
The NCLT’s order Bengaluru bench had accepted BCCI’s plea to start insolvency proceedings against Think and Learn Pvt Ltd, Byju’s parent company, after Byju’s failed to settle ₹158.9 crore in outstanding dues. The tribunal also rejected Byju’s attempt to have the dispute referred to arbitration, ruling that the request was not maintainable. In response to the NCLT’s order, Pankaj Srivastava has been appointed as the interim resolution professional.
Dispute Origins and Financial Challenges due to Byju’s Insolvency
Earlier this week, Byju’s expressed optimism about reaching a settlement with BCCI, hoping to resolve the matter amicably. Once valued at $22 billion, Byju’s financial situation has deteriorated significantly, exacerbated by the resumption of in-person schooling following pandemic restrictions. BlackRock recently revised the company’s valuation downward to $1 billion.
The company’s troubles began when it missed crucial financial reporting deadlines two years ago and fell short of its revenue targets by over 50%. This financial shortfall led to mounting challenges, culminating in the current insolvency proceedings.
In February, investors in Think and Learn, including major stakeholders Prosus and Peak XV, voted to remove founder Raveendran as CEO during an extraordinary general meeting (EGM). The vote was driven by allegations of mismanagement and operational failures, which Raveendran has denied, contesting the vote’s legitimacy.
Byju’s Seeks Urgent Review of Insolvency Case Due to NCLT’s order
The core of the ongoing dispute is the ‘Team Sponsor Agreement’ that Byju’s and BCCI entered into on July 25, 2019. Under this agreement, Byju’s committed to making payments related to BCCI’s cricket events. However, after March 31, 2022, Byju’s only partially fulfilled its payment obligations, settling just one invoice for the India-South Africa cricket series held in June 2022, amounting to ₹25.35 crore. The company failed to pay subsequent invoices, leading to the dispute with BCCI.
The NCLT’s order noted that Byju’s had acknowledged the debt but failed to make the necessary payments, instead repeatedly requesting extensions from BCCI. The tribunal highlighted that the non-payment constituted a breach of the agreement terms, prompting the initiation of insolvency proceedings.
As Byju’s navigates these legal and financial challenges, the outcome of the appeal in NCLAT will be crucial in determining the company’s next steps and its ability to resolve its disputes with BCCI while addressing its broader financial issues.
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