NCLT Stays BYJU’S Insolvency Bidding Process Till August 31

The National Company Law Tribunal (NCLT) has stayed the insolvency bidding process of embattled edtech startup BYJU’S parent Think & Learn Pvt Ltd until the next hearing on August 31.

The tribunal’s Bengaluru bench directed the insolvency resolution professional (IRP) not to issue Form G, the document inviting expressions of interest from prospective applicants. Thus, the list of potential bidders can not be determined until further orders. 

Important to highlight that the tribunal has not halted the insolvency proceedings itself. While the corporate insolvency resolution process will continue, the dispute over the lenders’ claim is currently adjudicated. 

The NCLT’s order came in response to a petition by cofounders Byju and Riju Raveendran, who challenged the admission of a ₹11,433 Cr claim by the trustee for the company’s US term loan lenders. 

The tribunal observed that the issue warranted detailed consideration and ordered that the bidding process remain on hold until the matter is heard.

To note, the insolvency case began because BYJU’S owed ₹158 Cr to the BCCI under a sponsorship agreement. The settlement required the approval via the insolvency process as the company is already under the Insolvency and Bankruptcy Code (IBC).

The latest development adds on to the increasingly complex legal case log of BYJU’S, which has drawn in multiple stakeholders, including the founders, US lenders represented by GLAS Trust, and other financial creditors, to court rooms across multiple jurisdictions.

Notably, Byju Raveendran is also facing a six-month civil contempt sentence in Singapore. On July 9, the Singapore High Court declined to extend the stay on Raveendran’s sentence pending appeal.

Meanwhile, as part of ending this long-standing legal duel, legal teams of Aakash Educational Services and the insolvency resolution professional (IRP) of Think & Learn, were close to reaching a settlement as of last month. 

As part of the settlement, the Term Loan B (TLB) lenders are in advanced talks to acquire an approximately 30% stake in Aakash Educational Services at a valuation of about $2 Bn. The settlement could potentially see the lenders dropping all legal actions against the company and its founder in exchange for Aakash’s stake.

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