Byju's Enters Insolvency Proceedings Over Unpaid BCCI Dues

Edtech company Byjus, once valued at USD 22 billion, is facing insolvency proceedings for failing to pay Rs 158.9 crore to the Board of Control for Cricket in India (BCCI). The National Company Law Tribunal (NCLT) in Bengaluru has approved the bankruptcy proceedings and appointed Pankaj Srivastava as the interim resolution professional. This decision suspends the company's board of directors and freezes its assets.

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Founder and CEO Byju Raveendran will now report to the interim resolution professional. Byjus had previously sponsored the Indian cricket team. Despite the NCLT's order, Byjus remains hopeful of reaching a settlement with BCCI. A spokesperson for Byjus stated, "As we have always maintained, we wish to reach an amicable settlement with BCCI and we are confident that, despite this order, a settlement can be reached."

Byjus' Financial Struggles

The company's financial troubles began when it missed financial reporting deadlines two years ago and fell short of revenue projections by more than 50 per cent. BlackRock recently reduced Byjus' valuation to USD 1 billion. The reopening of schools after pandemic restrictions eased contributed to the company's decline.

In February, investors in Byjus' parent company Think & Lean (T&L), including Prosus and Peak XV, voted to remove Raveendran as CEO during an extraordinary general meeting (EGM). They cited allegations of mismanagement and failures. Raveendran has denied these allegations and disputed the validity of the votes.

Legal Battles and Sponsorship Agreement

The investors and founders are engaged in a legal battle while the company faces job cuts and shrinking business. NCLT has invited creditors, employees, and vendors to file claims against Byjus. The BCCI and Byjus entered into a Team Sponsor Agreement on July 25, 2019. This agreement allowed Byjus to display its trademark on the Indian cricket team's kit and place advertisements during cricket series telecasts.

According to the NCLT order, Byjus was required to pay a fee to BCCI as part of this agreement. The company availed these services until March 31, 2023. After March 31, 2022, Byjus made full payment only for one invoice related to the India-South Africa cricket series held in June 2022, amounting to Rs 25.35 crore.

Unpaid Dues and Bankruptcy Proceedings

However, subsequent invoices remained unpaid. A bank guarantee of Rs 143 crore was encashed but was insufficient to cover the entire amount owed. The sponsorship fee for series/tours including South Africa, Australia, Sri Lanka, New Zealand, Asia Cup, and ICC T20 between August 2022 and January 2023 amounting to Rs 158.9 crore remains unpaid.

The NCLT order stated that it is undisputed that Byjus availed BCCI's services but failed to pay the agreed fee despite acknowledging the dues. Instead, Byjus repeatedly requested extensions for payment from BCCI.

Byjus plans to challenge the NCLT order before the appellate tribunal NCLAT while its lawyers review the current order. The company aims to protect its interests amidst ongoing legal battles with investors and operational challenges.

The outcome of these proceedings will significantly impact Byjus' future operations and financial stability as it navigates through this challenging period.