NCLAT Dismisses Appeals for Settlement in Byju's Insolvency Case

In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) has dismissed the appeals filed by the BCCI and Byju’s board member Riju Raveendran, rejecting their plea to withdraw insolvency proceedings against the debt-ridden edtech firm.

The appellants had challenged a previous order by the Bengaluru bench of the National Company Law Tribunal (NCLT), which directed that their settlement proposal be submitted to the newly formed Committee of Creditors (CoC). The CoC includes US-based Glas Trust, representing lenders to whom Byju’s owes $1.2 billion.

Legal Standpoint and Implications

The Chennai NCLAT bench upheld NCLT's directives, emphasizing that the settlement proposal, coming after the CoC's formation, necessitates the lender body's approval under IBC section 12A. This decision underscores the procedural rigor in insolvency cases and the importance of creditor consensus.

Both BCCI and Riju argued for the application of Regulation 30A(1)(a), pertaining to filings made before CoC constitution. However, NCLAT clarified that since the application was submitted post-CoC formation, the provisions of Section 12A, requiring 90% CoC voting approval, are fully applicable.

Background and Future Steps

The Corporate Insolvency Resolution Process (CIRP) against Byju's was initiated on July 16, 2024, following NCLAT's admission of BCCI's claim as an operational creditor. Despite a temporary halt in proceedings after a settlement approval, the Supreme Court later invalidated this decision, directing BCCI to seek resolution through NCLT.

This ruling marks a pivotal moment in Byju's ongoing financial and legal challenges, highlighting the complexities of insolvency proceedings in India's corporate landscape.