Aditya Birla Finance accuses Byju’s insolvency professional of fraud in creditor classification

Mumbai: Aditya Birla Finance, one of the creditors of Byju’s, on Wednesday accused the company’s interim resolution professional (IRP) of playing fraud in the ongoing corporate insolvency resolution process of the edtech firm.

Aditya Birla Finance has filed a plea in the National Company Law Tribunal against Byju’s resolution professional for alleged wrongful classification of the lender as an ‘operational creditor’ instead of as a ‘financial creditor’.

A bench led by justices K Biswal and Manoj Kumar Dubey issued notice to the IRP and posted the matter for further hearing on 24 September. The bench has given the resolution professional one week to file objections.

Udaya Holla, senior counsel for Aditya Birla said, “Aditya Birla was the creditor to Think and learn... the balance sheet shows that they owe us ₹139 crores. The IRP issued notice in the CoC (committee of creditors) meeting, and thereafter 15 days later, IRP said we are not a financial creditor but operational creditors. This is absolute fraud played by the IRP.”

Financial creditors provide loans or other forms of credit to a company, while operational creditors supply goods or services as part of the company's regular business activities. But the primary distinction between the two lies in the nature of their claims during an insolvency process. 

Financial creditors have a primary claim on the assets of a bankrupt company, followed by operational creditors. India’s Insolvency and Bankruptcy Code (IBC) aims to balance the interests of both types of creditors to ensure a fair and transparent insolvency process for all parties involved.

Glas Trust vs resolution professional

US-based Glas Trust, which has provided a $1.2-billion Term Loan B to Byju's, has also filed a plea against the resolution professional. 

Last week, Glas Trust was allegedly unlawfully ousted from the committee of creditors by Byju's insolvency resolution expert, Pankaj Srivastava. Srivastava has admitted the lender's claims under ‘contingent liability’.

The US lender has sought the removal of the resolution professional. However, the plea is yet to be decided on merits as a parallel proceeding is pending before the Supreme Court. 

The court is likely to hear the matter on 17 September.

The Supreme Court had earlier declined a plea by Byju's to prevent the resolution professional from constituting a committee of creditors till the top court decides on the case.

Meanwhile, the Bengaluru bench of the NCLT has deferred its decision to grant an immediate stay on a plea filed by Glas Trust, seeking a stay on the committee of creditors’ meetings to be conducted in the Byju’s insolvency case.