Glas Trust, Aditya Birla Finance reinstated as lenders of edtech co Byju's

The National Company Law Tribunal (NCLT) on Wednesday reinstated Glas Trust and Aditya Birla Finance as lenders of cash-strapped edtech firm Byju’s.

 

The tribunal ordered disciplinary action against Interim Resolution Professional (IRP) Pankaj Srivastava and rejected his decision to exclude Glas Trust and Aditya Birla Finance from the Committee of Creditors (CoC) of the edtech firm. The CoC balances the interests of all stakeholders during an insolvency process.

 

Both Glas Trust and Aditya Birla Finance were initially part of the CoC last year in August but were later removed from the reconstituted CoC by the IRP.

 

While Aditya Birla Finance alleged that the IRP had wrongfully classified it as an “operational creditor” instead of “financial creditor”, or lender, Glas Trust said it was wrongfully ousted from the CoC.

 

Financial creditors have a financial contract with the debtor (one who owes a debt), such as a loan, debt security, or guarantee. Operational creditors provide goods or services to the debtor, such as employees, suppliers, or government entities.

 

Observing that the conduct of the IRP was not “fit and proper”, the tribunal said: “It is clear that the… IRP has a duty to assist the tribunal with integrity in an honest and fair manner and the conduct of the IRP in the present case has been filed with the intent to mislead the tribunal… Further, the conduct of the IRP is not fit and proper as expected from an officer of the tribunal."

 

The bench of K Biswal and Ravichandran Ramaswamy also called for the initiation of disciplinary proceedings by the Insolvency and Bankruptcy Board of India (IBBI) against IRP Srivastava.

 

Srivastava, meanwhile, told the tribunal that the CoC was formed provisionally due to pressure from US lenders Glas Trust after the Supreme Court opened the insolvency proceedings against Byju's.

 

The newly formed CoC will now take a decision to appoint a new resolution professional in place of Srivastava.

 

The NCLT is yet to decide the application by the Board of Control for Cricket in India (BCCI), seeking to settle its dispute with Byju’s for the default of Rs 158 crore.

 

The tribunal had in July last year started the insolvency proceedings after BCCI alleged that Byju’s had defaulted on Rs 158 crore. But the National Company Law Appellate Tribunal (NCLAT) halted the proceedings against the firm after it claimed that it had reached an agreement to pay Rs 158 crore to BCCI towards outstanding dues.

 

But Glas Trust, alleging that the money was “illegal” and siphoned from them, moved the Supreme Court.

 

The apex court in October last year set aside the NCLAT order halting the insolvency proceedings against Byju’s. This meant that the insolvency proceedings were reopened against the edtech firm.

 

The matter was sent back to the NCLT for a decision.