BYJU’S Goes to NCLAT After Karnataka HC Rejects BCCI Case Plea

The National Company Law Tribunal (NCLT) ruling on the Board of Control for Cricket in India’s (BCCI) bankruptcy plea was challenged by troubled edtech company Byju’s in the Karnataka High Court on Friday. However, the court rejected the appeal, according to people with knowledge of the case.

According to other sources, the edtech intends to reapply to the National Company Law Appellate Tribunal (NCLAT) on Monday.

According to reports on July 16, the NCLT declared BYJU’s parent business, Think and Learn Pvt Ltd, insolvent because of unpaid debt totaling INR 158 Cr, which was connected to sponsorship rights from the BCCI.

The current management of the edtech company is automatically stopped according to the earlier NCLT order.

A moratorium will also shield cash-strapped Byju’s assets, preventing any sales or transfers of those assets as well as the filing of any new lawsuits against the company. This will affect the other cases against Byju that are still ongoing before the tribunal.

Byju’s was ordered by the NCLT to keep its shareholding at the same level in an order dated June 12, which put a stop to its controversial rights issue.

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The dispute began in 2019 when Chinese smartphone manufacturer OPPO relinquished sponsorship of the Indian cricket team to BYJU’S. The deal is scheduled to expire in March 2022. Following this time frame, BYJU’S attempted to renew the sponsorship for one additional year. But the massive edtech company abruptly pulled out of the sponsorship agreement with the BCCI in December 2022, alleging legal and financial difficulties.

Lawyers for BYJU’S filed a motion in the NCLT in January opposing the BCCI’s appeal to begin the company’s insolvency resolution process and requesting the appointment of an arbitrator.

According to a report, BYJU’S contended that the BCCI’s claims of unpaid dues worth INR 158 Cr as an operating credit were unlawful because the BCCI did not deliver any services after the contract termination. But in its ruling on July 16, the NCLT dismissed BYJU’s complaints, noting that email exchanges between the parties showed that the sponsorship agreement and associated services remained in force until September 15, 2023, and that BYJU’s was still able to utilize all sponsor privileges.

In addition, the edtech startup is battling a group of investors in the Karnataka High Court, including Prosus and Peak XV Partners, for an extraordinary general meeting (EGM) that is intended to remove CEO Raveendran.

Prosus was said to have written off its 9.6% remaining ownership in Byju’s on June 24. As a result, the technology investment business with a Dutch stock exchange has fully written down its investment in the edtech company.

This occurs at the time when BYJU’S founder and CEO Byju Raveendran purportedly stated that “thousands” of the company’s workers would probably be forced to quit due to the startup’s insolvency procedures.