NCLAT Approves Byju's Rs 158.9 Crore Settlement with BCCI, Insolvency Plea Dismissed

The insolvency appellate tribunal has approved a Rs 158.9 crore dues settlement between Byjus and the BCCI, effectively ending insolvency proceedings against the edtech company. This decision reinstates Byju Raveendran's control over the firm. The company hailed the order as a significant victory, highlighting the promoters' sacrifices to keep the business afloat.

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Settlement Details and Tribunal Observations

The National Company Law Appellate Tribunal (NCLAT) noted that the settlement was reached before a Committee of Creditors could be formed. The payment source was not disputed, nor linked to foreign funds as alleged by US-based creditors. The tribunal warned that any failure to meet payment deadlines would revive insolvency proceedings.

The NCLAT's two-member Chennai bench approved the settlement in open court, stating, "In view of the undertaking given and affidavit filed, the settlement between the parties is hereby approved and as a result, the appeal succeeds and impugned order passed by the NCLT is set aside."

Payment Schedule and Compliance

Riju Raveendran, Byju Raveendran's brother, paid Rs 50 crore on July 31, 2024, towards Byjus' dues to BCCI. An additional Rs 25 crore was scheduled for Friday, with the remaining Rs 83 crore due on August 9 via RTGS. The tribunal confirmed that taxes were paid and funds came through proper banking channels.

The NCLAT dismissed allegations of round-tripping by Byjus' US-based lenders due to lack of evidence. Solicitor General of India Tushar Mehta, representing BCCI, stated he had no objections to receiving money from Riju if it came through proper channels.

Background and Previous Proceedings

On July 16, the Bengaluru bench of the National Company Law Tribunal (NCLT) admitted Think and Learn to insolvency resolution following a plea by BCCI over unpaid dues of Rs 158.9 crore. The NCLT had suspended Byjus' board and appointed an interim resolution professional to manage operations.

Byjus had entered into a Team Sponsor Agreement with BCCI on July 25, 2019. This agreement allowed Byjus to display its brand on the Indian cricket team's kit and place advertisements during cricket series broadcasts. In return, Byjus was required to pay a fee to BCCI.

Financial Struggles and Valuation Decline

Byjus faced financial difficulties after schools reopened post-pandemic. BlackRock recently reduced its valuation from USD 22 billion to USD 1 billion. The company's troubles began when it missed financial reporting deadlines two years ago and fell short of revenue projections by over 50%.

In February, investors in Think & Learn, including Prosus and Peak XV, voted to remove Raveendran as CEO during an extraordinary general meeting (EGM), citing mismanagement allegations. Raveendran denied these claims.

Founder Byju Raveendran expressed gratitude for the NCLAT order, stating, "Today's NCLAT order is not just a legal victory but a testament to the heroic efforts made by our BYJUS family in the last two years." He praised his team for their resilience and commitment despite unprecedented challenges.

Byjus made full payment only for one invoice related to the India-South Africa cricket series in June 2022, amounting to Rs 25.35 crore. Subsequent invoices remained unpaid despite a bank guarantee of Rs 143 crore being encashed. The sponsorship fees for various series between August 2022 and January 2023 totalled Rs 158.9 crore.

The NCLAT's decision marks a crucial turning point for Byjus, allowing it to exit corporate insolvency resolution and regain control under its original promoters.