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The Board of Control for Cricket in India (BCCI) on Tuesday achieved a feat that many creditors of edtech firm Byju’s have failed to, with the National Company Law Tribunal (NCLT) admitting its petition seeking insolvency proceedings against Byju’s parent Think and Learn over its inability to pay dues of Rs 158 crore. At the same time, the NCLT dismissed an application by Byju’s to refer the matter to arbitration.
So far there have been seven cases, including BCCI's, where vendors have sued Byju’s at NCLT to recover dues. The only case where the edtech firm was able to reach an amicable settlement was with telemarketing firm Surfer, which, on July 15, told the Bengaluru bench of NCLT that it has sorted out issues with Byju’s. Sources said that Byju’s is planning to challenge the order in National Company Law Appellate Tribunal (NCLAT).
Meanwhile, the company said that it is looking for a settlement with the BCCI. "As we have always maintained, we wish to reach an amicable settlement with the BCCI and we are confident that, despite this order, a settlement can be reached. In the meantime, our lawyers are reviewing the order and will take necessary steps to protect the company’s interests,” a Byju’s spokesperson said.
The NCLT has appointed Pankaj Srivastava as the interim resolution professional after finding that Byju's had defaulted on a debt due to the BCCI over the Indian cricket team's jersey sponsorship.
An interim resolution professional looks after the company till a Committee of Creditors (CoC) is formed. CoC is the decision-making body in an insolvency process.
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“Accordingly, this adjudicating authority (NCLT) is of the considered opinion that there is no reason to deny the petition filed under Section 9 of the IBC (Insolvency and Bankruptcy Code), 2016, by the Operational Creditor to initiate CIRP (Corporate Insolvency Resolution Process) against the Corporate Debtor, since the existence of a debt and a default in the payment of debt is clearly established. Therefore, the instant Company Petition bearing CP (IB) No. 149/2023 (plea) is admitted against the Corporate Debtor and moratorium is declared in terms of Section 14 of the Code," the order said.
Operational Creditor under IBC is a person to whom the debt is owed, including the person to whom such debt has been legally transferred.
With this order of NCLT, Byju's crisis seems to have just worsened. This is because the edtech firm is now under moratorium, meaning no judicial proceedings for recovery, enforcement of security interest, sale or transfer of assets, or termination of essential contracts can be instituted or continued.
"It is abundantly clear as laid down by the Hon’ble Apex Court that the Adjudicating Authority has to either reject or Admit the Application and cannot postulate a third option. In this matter, the application U/s 9 of the IBC has been admitted by the Order passed today, therefore, the application for referring the matter for Arbitration is not maintainable," said the NCLT.
The sponsorship contract between BCCI and Byju's began in 2019 when the company replaced mobile phone manufacturer OPPO as the sponsor of the Indian cricket team's jerseys. According to reports, this contract was originally set to end in 2022 but was later extended to include 2023.
However, in early 2023, Byju's announced that it would not be renewing its sponsorship deal with BCCI as well as other partnerships with the International Cricket Council (ICC) and Fédération Internationale de Football Association (FIFA).
Later that year, BCCI filed its plea to initiate the insolvency process against Byju's.
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