Byju’s has petitioned the National Company Law Appellate Tribunal (NCLAT) to overturn a previous NCLT ruling that granted the cricket board BCCI’s request to begin insolvency proceedings against the once-famous edtech company.
According to people familiar with the matter, the business is requesting a prompt hearing on the issue. However, Byju’s remained silent about the matter. A Byju’s spokesperson had said, “As we have always maintained, we wish to reach an amicable settlement with the 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.”
Sources state that Byju’s filed a petition with the NCLAT on Thursday, appealing the decision made by the Bengaluru bench of the NCLT to accept the cricket board’s request to file for bankruptcy against Think and Learn, the parent company, after the edtech company neglected to pay dues totaling Rs 158.9 crore.
Raveendran, the founder and CEO of Byju’s shall answer to the resolution professional. Pankaj Srivastava has been appointed by NCLT as the professional for interim resolution. Previously, Byju’s had sponsored the Indian cricket squad.
Byju’s had stated earlier this week that it hopes to come to an amicable settlement with the Indian cricket board, or BCCI.
Byju’s was previously estimated to be worth $22 billion, but it fell apart when schools reopened following the relaxation of pandemic restrictions. BlackRock just reduced its $1 billion valuation. The company’s problems started two years ago when it missed financial reporting deadlines and overshot revenue predictions by more than 50 per cent.
Allegations of mismanagement and failures led a group of investors in Byju’s parent firm Think & Lean (T&L), including Prosus and Peak XV, to vote during an extraordinary general meeting (EGM) in February to remove Raveendran as CEO. Raveendran has refuted claims and called into question the legitimacy of the voting.
A legal battle has been raging between the investors and the founders independently, while the company has seen job losses and declining sales. NCLT invited creditors, employees and vendors to file claims against Byju’s. “It cannot be disputed that the Corporate Debtor has availed the services of Operational Creditor. Corporate Debtor had never disputed the fact that it was required to pay the agreed Fee as per the arrangement between the parties. However, despite having acknowledged the dues, the Corporate Debtor has failed to pay and instead, the Corporate Debtor repeatedly kept requesting the Operational Creditor for extension of time for payment,” the NCLT order said.
At the heart of the dispute is the ‘Team Sponsor Agreement’ that BCCI and Byju’s entered into on July 25, 2019. According to this agreement, Byju’s got the exclusive right to display its trademark/brand name on the kit of Indian cricket team, placing advertisements during telecast of cricket series, and hospitality and non-hospitality tickets for every ticketed match organised by BCCI, according to the NCLT order.
“As consideration, the Corporate Debtor (Byju’s) was required to pay a fee to the Operational Creditor (BCCI),” it said. “The Corporate Debtor was the Sponsor of the Indian cricket team as per the above arrangements and availed the Services for a period up until March 31, 2023.
Following March 31, 2022, Byju’s paid one invoice in full (worth Rs 25.35 crore) for the June 2022 India-South Africa cricket series, but neglected to pay the remaining debts.
The statement added that the sponsorship fees for series/tours, such as those of South Africa, Australia, Sri Lanka, and New Zealand, as well as the Asia Cup and ICC T20 between August 2022 and January 2023, amounting to Rs 158.9 crore, remain unpaid. A bank guarantee of Rs 143 crore was cashed, but that was insufficient to cover the entire amount.
(with inputs from PTI)