Byju's Insolvency Case Takes a Turn

The National Company Law Appellate Tribunal (NCLAT) has made a significant ruling in the ongoing insolvency proceedings against Byju's, emphasizing the pivotal role of the committee of creditors (CoC). The tribunal dismissed attempts by Byju's founder's brother, Riju Ravindran, and the Board of Control for Cricket in India (BCCI) to withdraw insolvency proceedings without the backing of the creditors.

The Crucial Role of Creditors

NCLAT upheld a decision by the Bengaluru bench of the National Company Law Tribunal (NCLT), stating that any settlement proposal after the formation of the CoC requires the consent of 90% of the creditor group, as per Sec 12A of the Insolvency and Bankruptcy Code. The CoC, including GLAS Trust and Aditya Birla Finance, holds significant sway, with GLAS Trust commanding a 99.4% voting share based on admitted claims.

The Dispute Origins

The case originates from a sponsorship dispute with BCCI, which filed an insolvency plea over unpaid dues of Rs 158.9 crore related to a 2019 agreement. Despite a proposed settlement leading to a brief stay on proceedings in August 2024, the Supreme Court overturned this in October following objections from GLAS Trust, questioning the settlement funds' origins.

Legal Implications

The tribunal noted that the withdrawal application was filed after the CoC's formation, making creditor consent mandatory. This ruling underscores the legal complexities and creditor rights in insolvency cases, setting a precedent for similar disputes.