Byju's contests insolvency order in NCLAT, hearing likely on July 22

18 Jul 2024 , 03:17 PM

On July 18, Byju’s challenged an order in the National Company Law Appellate Tribunal (NCLAT) that initiated insolvency proceedings against the startup, which was once valued at $22 billion. The appellate tribunal is expected to hear the appeal on July 22, although Byju’s sought an urgent hearing.

Senior advocate Abhishek Manu Singhvi, representing Byju’s, stated that the company remains solvent with thousands of employees and is prepared to deposit the entire ₹158 Crore in one installment within one month.

On July 16, the National Company Law Tribunal (NCLT) admitted Byju’s parent company, Think and Learn, to the insolvency resolution process based on a plea from the Board of Control for Cricket in India (BCCI) over unpaid dues of ₹158 Crore.

The edtech company failed to pay sponsorship dues of ₹158 Crore to the BCCI, despite its logo being on the Indian men’s cricket team’s jersey.

The NCLT’s order means founder Byju Raveendran has lost immediate control of the company, with a bankruptcy professional appointed to oversee day-to-day operations during the proceedings.

Pankaj Srivastava was named as the interim resolution professional (IRP) to manage the company. The IRP is responsible for collating all claims against Think and Learn Pvt Ltd, determining its financial position, and forming a Committee of Creditors.

Byju’s request to refer the dispute to arbitration was dismissed by the NCLT, and it was ordered that no assets of Byju’s can be transferred during the insolvency period.

The Insolvency and Bankruptcy Code (IBC) prohibits the institution of any new suits or the continuation of existing cases against Byju’s during the insolvency proceedings.

Byju’s, once the world’s largest education technology company and a prominent example of India’s startup success, has faced significant financial challenges.

The company’s valuation has dropped from $22 billion to less than $1 billion over the years, with creditors filing lawsuits to recover debts, coaching centers closing due to unpaid rent, and thousands of employees left without salaries.

Byju’s is headquartered in Bengaluru and was founded in 2011 by Byju Raveendran and Divya Gokulnath.

As of January 2024, Byju’s sought a valuation of $200 million, a sharp decline from its peak valuation of $22 billion in 2022. By April 2023, the company claimed to have over 150 million registered students.

In April 2024, Byju’s laid off approximately 500 employees, primarily from its sales and marketing departments, according to a report by the Times of India.

Byju’s app was developed by Think and Learn Pvt. Ltd, established by Byju Raveendran, Divya Gokulnath, and a group of students in 2011. Byju Raveendran, an engineer by profession, has been coaching students in mathematics since 2006.

The National Company Law Tribunal (NCLT) admitted Byju’s parent company, Think and Learn, to the insolvency resolution process in July 2024, following a plea from the BCCI over unpaid dues exceeding ₹158 Crore.