 "Byju's co-founder moves NCLT to remove GLAS Trust from creditors' panel")
Riju Ravindran, co-founder and former promoter of Think and Learn (which owns edtech firm Byju’s), has approached the National Company Law Tribunal (NCLT) seeking the removal of GLAS Trust Company LLC from the list of financial creditors and from the Committee of Creditors (CoC).
In his petition, Ravindran alleged that GLAS Trust has “fraudulently represented itself to be a financial creditor” and urged the tribunal to direct the firm to “prove its authority to represent the creditors before it”, according to a report by Press Trust of India.
Limited voting rights claimed
Ravindran argued that GLAS Trust, which acts on behalf of a US-based creditor of Byju’s, only holds 17.38 per cent of the voting rights in the term loan consortium. He stated that, under the agreement, actions on behalf of the lenders can only be taken with authorisation from those holding more than 50 per cent of the term loan.
GLAS Trust is the trustee for lenders to whom Byju’s owes around $1.2 billion. Ravindran asked the NCLT to “direct removal of GLAS Trust Company LLC from CoC of Think and Learn forthwith and to, consequently, set aside and declare all decisions taken by the CoC...with GLAS Trust Company LLC, as a member, as nullity”.
The Bengaluru bench of the NCLT is expected to hear the matter on Friday.
Request to halt CIRP
As a temporary relief, Ravindran also sought a stay on the Corporate Insolvency Resolution Process (CIRP) of Think and Learn until GLAS can prove it has the proper authorisation from over 50 per cent of qualified lenders, as per the Credit and Guaranty Agreement signed on November 24, 2021.
This application was filed in the main petition initiated by the Board of Control for Cricket in India (BCCI), which triggered the CIRP against the company.
Ravindran accused GLAS of misrepresenting itself as a financial creditor and obtaining orders from NCLT on that basis.
“This fundamental fraud has been perpetrated upon this tribunal by GLAS by illegally claiming that it has the authority to represent lenders under the Credit and Guaranty Agreement dated 24.11.2021 without possessing the requisite mandate from 51 per cent of qualified lenders,” the petition stated.
He also claimed that a contractual disqualification mechanism, exercised by the company, had led to the disqualification of 61.43 per cent of the term loan holders, effectively reducing GLAS' authority to only 17.38 per cent.
“This disqualification has reduced GLAS' actual authority to represent merely 17.38 per cent of the term loan, rendering every action taken by GLAS in these proceedings as ultra vires and void ab initio,” he said.
Accusation of conspiracy
Ravindran further alleged that GLAS had “orchestrated” a scheme involving Ernst & Young (EY) and successive Resolution Professionals to manipulate the CIRP and maintain unlawful control over the process, despite being aware of its lack of proper authority.
Byju's Alpha Inc, a fully-owned US subsidiary of Think and Learn, had taken a $1.2 billion loan under the Credit and Guaranty Agreement on 24 November 2021. This five-year loan was due to mature in November 2026. However, GLAS issued a notice of default and tried to accelerate the repayment in March 2023 — just 15 months into the agreement and well before the maturity date.
After discovering that some lenders had replaced original investors in violation of the agreement, Think and Learn issued disqualification letters to Redwood entities on 5 June 2023 to protect its position.
Disputed representation figures
GLAS, which also filed an insolvency application, claimed that 72.2 per cent of lenders had approved the move. Ravindran countered this, stating that 61.43 per cent of those were disqualified lenders.
“It is submitted that out of these 72.20 per cent, 61.43 per cent are disqualified lenders. Therefore, from the lenders who consented (or voted 'yes'), only about 10.77 per cent are not disqualified lenders. The percentage of disqualified lenders who consented in proportion to non-disqualified lenders is 6.61 per cent. This would, perforce, mean that GLAS has the authority to represent only 17.38 per cent of the term loan,” he added.