Troubled edtech firm Byju’s has announced its intention to appeal a recent ruling by the National Company Law Tribunal (NCLT) concerning an insolvency plea filed by the Board of Control for Cricket in India (BCCI). On Friday, the Karnataka High Court declined to admit Byju’s plea challenging the NCLT order, prompting the company to plan an approach to the National Company Law Appellate Tribunal (NCLAT) on Monday, sources familiar with the matter said.
The NCLT’s order, dated July 16, admitted Byju’s parent company, Think and Learn Pvt Ltd, into insolvency over unpaid dues amounting to Rs 158 crore related to sponsorship rights from the BCCI. This decision has significant implications for the edtech giant, whose founder, Byju Raveendran, warned that the insolvency process could cause vendors who provide essential services for Byju’s online platforms to declare a default. “This would lead to a total shutdown of services and halt operations,” he stated, according to a Reuters report.
A spokesperson for Byju’s declined to comment on the ongoing legal proceedings.
The NCLT’s order has also automatically suspended the current management of Byju’s. Additionally, the company’s assets are now protected under a moratorium, preventing any transfer or sale of assets and blocking the institution of new suits against it. This will impact other pending cases against Byju’s before the tribunal.
The dispute with the BCCI dates back to a jersey sponsorship agreement signed in March 2019, initially for three years and later extended by one year. Byju’s had made payments until September 2022, with the current dispute arising over unpaid dues from October 2022 to March 2023.
Beyond the BCCI dispute, Byju’s is engaged in a legal battle in the Karnataka High Court against a group of investors, including Peak XV Partners and Prosus, over an extraordinary general meeting (EGM) aimed at removing Chief Executive Byju Raveendran. On June 23, Byju’s filed a petition at the Karnataka High Court challenging the NCLT order that prevents the company from proceeding with its second rights issue. The NCLT had directed Byju’s to maintain the status quo in its shareholding, effectively pausing its contentious rights issue.
In a related development, Prosus wrote off its remaining 9.6% stake in Byju’s, as reported by ET on June 24. This write-off means that the Dutch-listed technology investment firm has now written off 100% of its investment in the edtech firm.
The challenges facing Byju’s are a stark reminder of the turbulence in the edtech sector and the broader pressures on startups in the current economic climate.
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