Byju’s “not cooperating” but gets a day’s reprieve in bankruptcy appeals court

The appeals court hearing a plea against the insolvency process initiated against Byju’s has deferred the formation of a Committee of Creditors, even as it was informed that the edtech company and its founder were being uncooperative.

The National Company Law Appellate Tribunal took an oral undertaking from the counsel representing the interim resolution professional appointed in the case that the CoC would not be formed until the appeals court passes its final orders on 2 August.

The creation of the committee would effectively result in handing over the company’s management to its creditors. The resolution professional is responsible for gathering information from Byju’s creditors and overseeing the company’s operations while the bankruptcy hearings are on.

Appearing for the resolution professional, advocate Pooja Mahajan informed the NCLAT bench that the ed-tech firm was not cooperating and that its founder and chief executive Byju Raveendran had refused to share details of bank accounts and other data.

Mahajan added that Raveendran had told the resolution professional the details could not be provided until the appeals forum passes a final order.

On the other hand, Arun Kathpalia, senior counsel for Byju’s, argued that the resolution professional should be inclined in a ‘resolution’ for the company, but that wasn’t the case. 

Also read | Mint Explainer: NCLT admits insolvency plea against Byju’s. Here’s what it means for the edtech platform

A bench of Justices Sharad Kumar Sharma and Jatindranath Swain was hearing a plea filed by Raveendran challenging the National Company Law Tribunal’s order initiating insolvency proceedings against the edtech company over ₹158 crore owed to the Board of Control for Cricket in India. 

Raveendran has also sought a stay on the formation of the CoC.

On Tuesday, when Byju’s announced a likely settlement with BCCI with Riju Raveendran, the founder’s younger brother, coming to the rescue, US lender Glas Trust Inc. vehemently opposed it, questioning the source of the funds. 

Glas Trust too has filed an insolvency application against Byju’s over claims on a guarantee worth ₹8,000 crore disbursed to the edtech firm’s US subsidiary.

Senior counsel Mukul Rohatgi, arguing for Glas, on Thursday questioned the settlement details, adding that Byju Raveendran was living in Dubai and his younger brother Riju Raveendran in London.

Rohatgi also cited a US court judgement stating that Riju Raveendran, a suspended director of Byju’s, had been ordered to pay a fine of $10,000 until he helps locate $533 million that has allegedly been hidden from the company’s US lenders.

An unconditional undertaking

Earlier, Riju Raveendran through his counsel informed the appeals court that he proposed to settle Byju’s dues to BCCI from his personal funds.

He said he had accumulated ₹3,600 crore by selling his shares in Byju’s parent company, Think and Learn Pvt. Ltd, to other investors between May 2015 and January 2022. 

The edtech company, to fend off the bankruptcy, approached NCLAT and informed it earlier this week that Riju Raveendran would settle the dues.

Also read | Mint Explainer: The mountain of legal cases that could bury Byju’s

Riju Raveendran stated that of the ₹3,600 crore, he had paid ₹1,050 crore as income tax. The remaining ₹2,600 crore, he said, had been infused in Think & Learn for operational needs, including to pay the salaries of its 27,000 employees.

The counsel for Riju Raveendran, Puneet Bali, submitted that the former Byju’s board member would discharge the entire settlement amount of ₹158 crore, and that ₹50 crore had been paid already. Another ₹25 crore and the ₹83 crore would be paid on 2 August and 9 August, respectively, he informed the court.

“Now to secure the balance we propose to hand over a post-dated cheque drawn in ICICI Bank in favour of BCCI. We would be bound by the undertaking and in event of any default we will be binding by the NCLT’s 16 July order. The NCLT ordered initiation of insolvency proceedings against Byju’s. We are giving unconditional undertaking in this regard,” Bali said.

‘Absolutely clean money’

Riju Raveendran confirmed that no part of the settlement amount was in violation of any order, including that of the Delware court in the US. He stated that he had not received $533 million that is a subject matter before the Delaware court. 

To clarify the source of funds, Riju Raveendran said that as per the credit agreement of 24 November 2021, Glas Trust had disbursed $1.2 billion to Byjus Alpha, a step-down subsidiary of Think and Learn. 

Under the credit agreement the money disbursed by the lender could not be brought to India. Therefore, none of the $533 million has been brought to India, he said.

“Riju has not directly or indirectly in any form or manner received money from disbursal of the lenders money. In fact, since the exhibition of the credit agreement there have been only two secondary sale of his shareholding in Think & Learn PVt Ltd in January and November in 2022 totalling to $109 million,” Bali told the court.

The counsel added that Riju Raveendran had not transferred or extended any security of his assets towards the payment of the settlement to BCCI. 

“From liquidation of the personal assets of Riju in India the settlement has been paid. This is all tax-paid money. This is from my personal account and has nothing to do with $533 million, which is absolutely clean and tax-paid money,” Bali said.