New Delhi: The National Company Law Appellate Tribunal (NCLAT) has dismissed a plea by Riju Raveendran, suspended director of bankrupt edtech firm Byju’s, to prevent its creditors from deciding on a ₹158 crore settlement with India’s cricket board.
The decision by the NCLAT’s Chennai bench on Thursday deals a significant blow to both Riju and founder Byju Raveendran, as it effectively gives the creditors all the powers to decide the fate of the ₹158 crore settlement, keeping the promoters out from decision-making on the issue. The committee of creditors (CoC) is dominated by creditors who oppose the settlement.
The plea by Riju Raveendran had challenged a 10 February order by the Bengaluru bench of the National Company Law Tribunal (NCLT), which directed the Board of Control for Cricket in India (BCCI) to place the settlement proposal before the CoC for approval, as part of efforts to facilitate Byju’s exit from insolvency proceedings.
Upholding the NCLT order, the top insolvency court ruled that since the CoC had already been constituted at the time the settlement offer was made, it is now within the committee’s jurisdiction to accept or reject it.
Key entities among the creditors are Glas Trust LLC and Aditya Birla Finance, who now wield the authority to determine whether Byju’s can exit bankruptcy through the proposed out-of-court settlement.
Glas Trust holds a dominant 99.41% voting share in the CoC based on its admitted claim of ₹11,432 crore. The remaining members include Aditya Birla Finance with a ₹47 crore claim (0.41%) and Incred Financial Services Ltd with ₹20 crore (0.18%).
As per the current insolvency process, Byju’s resolution professional, Shailendra Ajmera, must present the settlement proposal to the CoC. If approved by 90% of the voting members, the proposal can be submitted to the NCLT for final sanction. Under Section 12A of the Insolvency and Bankruptcy Code (IBC), the tribunal must approve the withdrawal of insolvency proceedings if the CoC grants majority consent.
However, securing that approval may prove difficult. Glas Trust is opposing the settlement and has called the funds used to pay BCCI “tainted”, arguing that the money should be used first to pay the dues of creditors.
Convincing the dominant creditor to reverse its stance will be a formidable challenge for the suspended promoters in order to free the company from insolvency proceedings.
However, the Byju brothers now have the option to approach the Supreme Court as a last resort to keep creditors out from settlement decision-making.
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Timeline of events
Byju’s insolvency case was triggered on 16 June 2024, after the company defaulted on a ₹158 crore payment to BCCI under a jersey sponsorship agreement. The edtech major had signed the deal in 2019, extending it until November 2023, but payment failures led BCCI to initiate insolvency proceedings.
After Riju Raveendran raised ₹158 crore to clear BCCI’s dues, both parties sought a court-sanctioned settlement. On 2 August 2024, the NCLAT allowed the withdrawal of the insolvency case, restoring temporary control of the firm to the Raveendran family.
However, Glas Trust contested the decision in the Supreme Court, arguing that the funds should have gone to financial creditors rather than BCCI. On 23 October, the apex court overturned the NCLAT order, stating that it had violated due process under the IBC, and sent the matter back to the NCLT for fresh adjudication.
Byju Raveendran currently resides in Dubai, while Riju is based in London.
Founded in 2011 by Byju Raveendran and Divya Gokulnath, Byju’s became India’s most valuable edtech startup, attracting marquee global investors and reaching unicorn status. But years of aggressive expansion led to financial distress, regulatory scrutiny, and deepening conflict with creditors, marking a stunning fall from grace for one of India’s most celebrated startups.
