Byju’s faces bankruptcy proceedings following BCCI petition over 158 crore default

Think and Learn Private Ltd (TLPL), the parent company of Byju’s, has been drawn into bankruptcy proceedings after the National Company Law Tribunal (NCLT) accepted a petition from the Board of Control for Cricket in India (BCCI). This action follows Byju’s default on a payment of ₹158 crore to the cricket board.

The NCLT bench, which includes judicial member K. Biswal and technical member Manoj Kumar Dubey, has appointed Pankaj Srivastava as the interim resolution professional (IRP). Srivastava must submit his written consent within a week. Upon accepting the role, he is required to provide bi-weekly progress reports.

Byju’s attempt to move the dispute to arbitration was dismissed by the Bengaluru tribunal, stating the plea was “not maintainable.” The company plans to challenge the order at the National Company Law Appellate Tribunal.

A spokesperson for Byju’s expressed hope for an amicable settlement with BCCI, despite the tribunal's decision. "We wish to reach an amicable settlement with 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," the spokesperson stated.

In the backdrop of these developments, Byju Raveendran faces the possibility of losing control of his firm.

Despite achieving a peak valuation of $22 billion in 2022, Byju’s has since faced significant challenges, leading to a dramatic drop in its market value.

Earlier this year, major foreign investors, including Prosus and Peak XV (formerly Sequoia Capital India), voted to remove Raveendran as CEO, citing “mismanagement and failures.” Raveendran has refuted these claims and questioned the legitimacy of the vote.

The tribunal has instructed the IRP to consolidate the financial claims against Byju’s and form a Committee of Creditors (CoC).

The IRP must report on the constitution of this committee within 30 days of his appointment. During the insolvency process, no new legal actions can be initiated against Byju’s, and the company’s assets will be frozen.

The conflict traces back to a ‘team sponsor agreement’ established in July 2019 between Byju’s and BCCI.

Although this agreement was initially set to expire on March 31, 2022, Byju’s continued as the sponsor of the Indian cricket teams until March 31, 2023.

Under the terms of the agreement, Byju’s was obligated to pay 50% of the aggregate fee for a series 30 days before the first match and the remaining balance within five days after the final match.

In early 2023, Byju’s announced it would not renew its sponsorship deal with BCCI. However, post-March 2022, Byju’s only made one full payment for the 2022-23 season, amounting to ₹25.35 crore on May 20, 2022.

Subsequent payments were not made, leading BCCI to encash a bank guarantee of ₹143 crore, which still fell short of covering all dues.