While setting aside the National Company Law Tribunal’s (NCLT’s) July 16 order that allowed insolvency proceedings to be initiated against Byju’s, the Chennai bench of the National Company Law Appellate Tribunal (NCLAT) said that if Riju Ravindran defaults on the terms of the settlement with BCCI, the order will be revived.
Raveendran’s brother and company board member Riju used his personal funds raised through the sale of his shares in Byju’s parent Think & Learn (between May 2015 and Jan 2022) and liquidated his personal assets in India to clear BCCI’s dues. The first tranche has been paid and the second was due to be paid by Friday (Aug 2). The full amount is scheduled to be paid by Aug 9.
“As it has been generally said, the first hour of justice is the hour of compromise… where the offer has been made by one of the suspended director (Riju), at the behest of the corporate debtor (Byju’s), to bury the hatchet forever with the operational creditor (BCCI), the court can invoke Rule 11 (of NCLAT Rules, 2016) for the purpose of exploring settlement between the parties… in view of the undertaking given and the affidavit filed (by Riju), the settlement between the parties is hereby approved and as a result thereof…. the impugned order is set aside,” the judge said while pronouncing the order.
The court said that the settlement is being arrived at before the committee of creditors could be formed and the source of the money is not in dispute.
In a statement, Byju’s said that during the court proceedings, it became clear that the promoters of the company have gone to great lengths and made immense personal sacrifice to keep their company running. “Today’s NCLAT order is not just a legal victory, but a testament to the heroic efforts made by our Byju’s family in the last two years. Today, we stand not just stronger, but more united than ever,” said Raveendran who is in Dubai even as his Bengaluru-based company is fighting for survival.
The NCLAT also said that the US lenders of Byju’s could not provide any evidence to establish that the funds being used by Riju to settle BCCI’s dues is part of the missing $533 million, quashing their claims of round tripping. The $533 million, which the lenders have accused Byju’s of hiding, is part of the $1.2-billion term loan B proceeds that they had extended the company in 2021. The lenders who argued that the payments to BCCI are allegedly fraudulent had approached a US court on Thursday, understood to be seeking some kind of an injunction.
The lenders who argued that the payments to BCCI are allegedly fraudulent had approached a US court on Thursday, understood to be seeking some kind of an injunction against Ravindran using his personal funds to settle the dues, Byju’s counsel claimed, calling it the “highest case of forum shopping”.
Once a high-flying decacorn startup valued at $22 billion, the NLCT, on a plea filed by the BCCI had ordered initiation of insolvency proceedings against the company. Raveendran’s quest for fast growth built on multi-million dollar acquisitions most of which failed to pay off and lack of governance at the company led to a drastic reversal of fortunes for the startup. Byju’s has slashed several thousand jobs, shut most of its offices and has been dragged to court by investors, lenders and employees.
