Disclose source of settlement funds to BCCI: NCLAT to Byju Raveendran

The National Company Law Appellate Tribunal (NCLAT) in Chennai has directed Byju Raveendran, the suspended director, shareholder, and promoter of edtech company Byju’s, to provide detailed information on the source of funds he plans to use to settle outstanding dues to the Board of Control for Cricket in India (BCCI).

This directive follows Raveendran’s appeal against a previous order by the National Company Law Tribunal (NCLT) in Bengaluru. This pertains to NCLT initiating insolvency proceedings against Byju's parent company, Think and Learn Pvt Ltd. The proceedings were in response to a case filed by BCCI, claiming a default of Rs 158 crore.

During the NCLAT hearing on Wednesday (31 July), it was revealed that both parties were actively working towards a settlement. Part of the dues has already been paid, with the remaining amount scheduled to be settled in two tranches on 2 and 9 August. The payments are to be made by Byju Raveendran’s brother, Riju Raveendran.

BCCI had filed the plea before the NCLT at Bengaluru after Byju's reportedly failed to pay the amount due to BCCI under a sponsorship contract for the Indian cricket team.

However, the proposed settlement faced objections from certain lenders of Think and Learn Private Limited. These lenders alleged that the funds intended for the settlement were tainted, referencing a judgement from the Delaware Court related to Byju’s U.S. entity, Byju’s Alpha.

Additionally, they claimed that the settlement with the operational creditor, BCCI, constituted a preferential transaction in violation of the Insolvency and Bankruptcy Code provisions.

Justice Rakesh Kumar Jain, a judicial member of NCLAT, instructed Byju Raveendran to file an undertaking specifying the source of the funds. The case has been scheduled for further hearing on Thursday (1 August).

Pankaj Srivastava, the interim resolution professional appointed to oversee the insolvency process, informed NCLAT that no committee of creditors would be formed at this stage.

Byju’s troubles began in 2022, coinciding with the resumption of regular classes following the disruptions caused by the COVID-19 pandemic. The company, which had experienced rapid expansion during the pandemic, laid off 1,000 employees, representing 15 per cent of its engineering workforce, in February 2023.

The ongoing legal and financial challenges pose significant hurdles for Byju’s, once hailed as a leader in the edtech sector. The outcome of the settlement discussions and the NCLAT’s directives will be crucial in determining the company’s future trajectory.