Byju Raveendran, the eponymous founder of edtech startup Byju’s, has regained control of the company.
The insolvency resolution process against Byju’s parent company Think and Learn has been halted as the National Company Law Appellate Tribunal (NCLAT) on Friday accepted the settlement reached between Byju Raveendran and the Board of Control for Cricket in India (BCCI).
With this, the promoters of the company, including Byju Raveendran, have control of the company.
However, this will be done on the condition that Byju Raveendran and Riju Raveendran do not default on the undertaking given. Any failure to make payments on the specific dates mentioned in the undertaking would automatically lead to reactivation of the insolvency proceedings against Byju’s.
“In view of the undertaking given and the affidavit filed, the settlement is approved, the appeal is allowed and the impugned order is set aside. However, provided that in case of non-compliance with the undertaking given, the insolvency order shall be revived,” a bench comprising judicial member Rakesh Kumar Jain and technical member Jatindranath Swain ruled.
The appellate court said the deal is being reached before the Committee of Creditors (CoC) can be formed, considering that the source of money (for the settlement) is not in dispute, there was no reason to keep the company in the insolvency process.
The NCLAT noted that “the money offered by the largest shareholder and former promoter (Riju Raveendran) has nothing to do with the US lenders, which gives the court the power to decide.”
The court also said that Tushar Mehta, appearing for the BCCI, had said that they would not accept any “tainted” money and that the money was income generated in India. The money was coming from a proper channel, the court noted.
Resilience
Byju Raveendran, Founder and CEO of Byju’s, welcomed the order and said, “Today’s NCLAT order is not just a legal victory, but a testament to the heroic efforts made by our Byju’s family over the past two years. Our founding team members have poured their entire hearts and souls, not to mention all their savings, into this dream, often at great personal cost,” Raveendran said.
He said every Byjuite (employee) has demonstrated extraordinary resilience, working tirelessly in the face of unprecedented challenges.
“Their collective sacrifice humbles me and I am deeply grateful to each one of them. Our trials and tribulations have only strengthened our resolve and sharpened our focus. Today, we are not only stronger but more united than ever,” said Byju Raveendran. “I have always believed that truth ultimately prevails and hard work always wins. We have supported Byju’s for two decades and are committed to its mission of imparting high-quality education to students everywhere. You can never defeat a team that never gives up,” he said.
The company said that Byju’s and its founders, NCLAT, have accepted the terms of the agreement entered into between one of the founders of Byju’s and BCCI. This immediately ended the insolvency proceedings initiated by the July 16 order of the National Company Law Tribunal (NCLT).
The company said the presiding judge invoked Rule 11 of the NCLAT Rules of 2016 to hand back control of Think & Learn Private Limited, the parent company of Byju’s, to its promoters. The company said NCLAT rejected allegations made by certain US-based lenders that the source of money being used to settle BCCI’s debts was not transparent and reliable.
Byju’s said that during the process, it became clear that the promoters of Byju’s have made great efforts and immense personal sacrifices to keep their company running. They have reinvested all their savings and even taken significant loans to help Byju’s tide over financial challenges. The company said that the details of the money generated through the secondary sale of shares and its subsequent reinvestment in the company were transparently shared with the NCLAT. “The validation and vindication of their sacrifices in this NCLAT order serve as a great assurance to all the employees and students of Byju’s,” the company said.
The company said all teams at Byju’s continue to work hard to build stakeholder trust and reinforce its commitment to serving millions of students.
Clean money
Riju Raveendran, a Byju’s board member and younger brother of edtech founder Byju Raveendran, told the NCLAT on Thursday that the money paid to the BCCI is “clean”.
Representing Riju, senior advocate Puneet Bali said the money was paid from the sale of his shares in Think & Learn Pvt. Ltd (TLPL) between 2015 and 2022.
TLPL is the parent company of Byju’s.
Bali said Riju, through share sales during this period, has amassed nearly Rs 3,600 crore.
“Of this amount, Rs 1,040 crore was paid as income tax. The remaining Rs 2,600 crore was injected into TLBL to ensure its continued operation. The amount given to Riju was used to pay the first tranche of the settlement amount of Rs 50 crore to BCCI on June 30, 2024. From the liquidation of Riju’s personal assets in India, he used the funds to pay the remaining balance,” Bali said.
The appellate court on Friday noted the typographical error that the first tranche of the settlement amount of Rs 50 crore was paid to the BCCI on July 31, 2024 and not on June 30, 2024.
In a lighter tone, the court told lenders: “I know you will use this (mistake) to go to the Supreme Court.”
As per the undertaking, Riju Raveendran made a payment of Rs 50 crore on July 31 against the outstanding dues owed by Byju’s to BCCI. Another Rs 25 crore will be released on Friday and the remaining Rs 83 crore on August 9 through RTGS.
India’s bankruptcy court had recently admitted an insolvency petition against Byju’s filed by the BCCI over debts amounting to Rs 158 crore from cricket sponsorship deals.
The US lenders, represented by senior advocate Mukul Rohatgi, had objected to the affidavit saying the “maths did not add up”. The first tranche of the settlement amount of Rs 50 crore to BCCI was to be paid on July 31 (earlier June 30), 2024.
“We are not keeping anything. These two Raveendrans have voluntarily declared bankruptcy in the US. There is nothing on record to show that they have any money. It cannot be that there (the US) you are a defaulter and here you come to India and say, ‘I will pay,’” he said.
He also claimed that Byju and Riju were absconders as they were no longer living in India. “He is an absconder, there is an ED inquiry and a lookout circular against him. He will not pay salaries, pensions and rents but wants a court’s stamp of approval to settle.”
Rohatgi said the Raveendran brothers are trying to delay the company’s insolvency resolution process for six months to degrade the company’s value.
A day earlier, a suspended director at troubled education technology firm Byju’s was ordered to pay $10,000 a day until he helps find $533 million his company is accused of hiding from U.S. lenders, a U.S. judge said.
Riju Raveendran, brother of Byju’s founder, has been at the centre of a dispute that has lasted nearly two years over the missing money. His lawyer told the court that the money paid to BCCI was not part of the $533 million claimed by the lenders.
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