In a significant turn of events, the Supreme Court has reserved its verdict on an appeal by Glas Trust Company LLC, a US-based lender, against the National Company Law Appellate Tribunal (NCLAT) decision favouring Byju’s. The court has also directed the Insolvency Resolution Professional (IRP) to maintain the status quo and refrain from holding any meetings with the Committee of Creditors (CoC) until the judgement is pronounced.
Glas Trust vs Byju’s: The Battle Over Insolvency
The insolvency dispute revolves around a settlement between Byju’s, India’s ed-tech giant, and the Board of Control for Cricket in India (BCCI). In August, NCLAT had allowed Byju’s to pay ₹158 crore to BCCI, which led to halting the insolvency proceedings against Byju’s. This move has been challenged by Glas Trust, which represents a consortium of US lenders owed significant amounts by the ed-tech company.
During the hearing, the Supreme Court questioned the validity of the NCLAT decision and suggested that the case might be sent back for fresh adjudication. Chief Justice DY Chandrachud raised concerns about the settlement benefiting only BCCI while other creditors were left in the lurch.
Court’s Concerns: Settlement Procedures and Creditor Rights
The apex court expressed doubts about whether the NCLAT had fully applied its mind to the case, particularly regarding Regulation 30A of the Insolvency and Bankruptcy Code (IBC). This regulation outlines the procedures for settlement, and the court questioned if the rules had been followed in settling with BCCI while excluding other creditors.
Solicitor General Tushar Mehta, representing BCCI, argued that any settlement should involve “clean” money, tax-paid and free from controversy, adding that the money used for the BCCI settlement came from Byju’s founder Riju Raveendran’s personal funds.
Glas Trust’s Stand
Representing Glas Trust, senior advocate Shyam Divan raised concerns over the company’s massive losses and financial mismanagement, noting that Byju’s auditor resigned in September 2024. Divan also pointed out that Byju’s allegedly defaulted on payments to creditors and questioned why the company settled only with BCCI, leaving a ₹15,000 crore debt unresolved.
What’s Next for Byju’s?
The Supreme Court’s decision to reserve judgment and halt any creditor meetings prolongs the uncertainty surrounding Byju’s insolvency. The court hinted that the matter may be referred back to NCLAT for a detailed reconsideration, leaving the future of Byju’s financial restructuring in limbo.
What Do You Think? With Byju’s insolvency case in the spotlight, do you believe the company will overcome this financial turmoil, or is this the beginning of a downward spiral? Share your thoughts in the comments below!
