BUSINESS-ECONOMY
BCCI is one of the creditors of Byju's as part of a deal to sponsor the Indian cricket team's jersey. The Indian cricket body had filed a case against the edutech firm to recover debt to the tune of 1.58 billion rupees. Now, the company law tribunal has allowed for the proceedings to go through. Will this mean BCCI can take over Byju's management? Read on to find out more. Will India's cricket body BCCI take over the running of eductech firm Byju's? The National Company Law Tribunal (NCLT) on Tuesday (July 16) admitted a plea from the Board of Control for Cricket in India seeking insolvency proceedings against Byju's. If the insolvency comes through, at least in theory BCCI, can take control of the company along with other creditors, which if it happens will be a rare occurrence. The NCLT in Bengaluru ruled that Byju's had defaulted on a debt to BCCI over the Indian cricket team's jersey sponsorship deals. The debt works out to around 1.58 billion rupees ($18.9 million). Byju's had sought arbitration on the issue, which NCLT rejected. BCCI and Byju's entered into a jersey sponsorship deal in 2019. Earlier the jersey sponsorship was with Chinese mobile phone firm Oppo. The contract with Byju's was till 2022 and then renewed for 2023. Amid a worsening financial turmoil, Byju's said in January 2023 that it would not extend sponsorship deals with BCCI, International Cricket Council (ICC) and Fédération Internationale de Football Association (FIFA). BCCI filed an insolvency petition against Byju's in the same year with NCLT, which sought a response from the edutech firm in November 2023. Byju's lawyers insisted that BCCI could not be considered an 'operational creditor' as their deal was not for services, but for the transfer of some rights. Byju's also claimed that BCCI could not prove a debt default, and cited other disputes with the cricket body that could prevent the Corporate Insolvency Resolution Process or CIRP, a recovery mechanism for corporates, from taking place. In its order on Tuesday, the NCLT rejected the pleas by Byju's, citing email communication between the parties that established that Byju's owed money to BCCI. "The Respondent herein has time and again acknowledged and duly planned a repayment schedule for the outstanding dues by sending the above mentioned emails," NCLT said in its order. "The condition of there being a ‘debt’ and a ‘default’ for the purposes of Section 9 of the IBC is held to be satisfied," the NCLT said, referring to the Insolvency and Bankruptcy Code (IBC) of 2016. Also read: Explained | From BYJU’S celebrated hero to despised villain, the story of Byju Raveendran BCCI had filed the petition under IBC, by which creditors can take control of a company from its current management. "There is no reason to deny the petition filed...by the Operational Creditor to initiate CIRP against the Corporate Debtor, since the existence of a debt and a default in the payment of debt is clearly established," NCLT said. "Therefore, the instant Company Petition...is admitted against the Corporate Debtor." Byju's was the darling of investors as the top edutech company during the startup boom era. Launched by Byju Raveendran, the company faced trouble as massive malpractices were exposed, including predatory marketing, selling courses to parents of children who didn't need them, and forcing many families into debt. Once considered a billionaire, Raveendran's net worth fell to zero. The bad press, public pressure and regulator scrutiny led to several investors exiting Byjus. This led to a funding crisis for the company as top brass - both corporate and board - left the firm. Salaries could not be paid for months. Watch: Byju's employees demand salary payment Those who left in the past year include chief financial officer Ajay Goel and India chief executive Arjun Mohoan, while advisors Rajnish Kumar and TV Mohandas Pai left this month. In June, Prosus wrote off the value of its 9.6 per cent stake in the company. The investment company had put in a total of around $500 million in Byju’s. At its peak, Byju's was valued at around $22 billion. This year, it raised $200 million through a rights issue. For this, the company was given a valuation of $225 million, which works out to around one per cent of its peak valuation. Pankaj Srivastava, who was appointed by NCLT in its order on Tuesday as the interim resolution professional, will run Byju’s till the lenders form a committee of creditors. (With inputs from agencies) Vinod Janardhanan is the digital content lead of this website. His life is more interesting inside his head, where sparks on global politics, entertainment, music, a None
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