NCLT admits insolvency plea against Byju's, rejects firm's arbitration plea
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The National Company Law Tribunal (NCLT) on Tuesday admitted edtech company Byju's parent Think and Learn to insolvency on a plea by the Board of Control for Cricket in India (BCCI).
The tribunal appointed Pankaj Srivastava as the interim resolution professional. It found that Byju's had defaulted on a debt due to the BCCI over the Indian cricket team's jersey sponsorship.
Byju's said it is looking for a settlement with BCCI.
"As we have always maintained, we wish to reach an amicable settlement with BCCI and we are confident that, despite this order, a settlement can be reached. In the meantime, our lawyers are reviewing the order and will take necessary steps to protect the Company’s interests," Byju's spokesperson said.
Byju’s is now under moratorium, meaning no judicial proceedings for recovery, enforcement of security interest, sale or transfer of assets, or termination of essential. contracts can be instituted or continued.
The NCLT dismissed an application by Byju's to refer the matter to arbitration.
"It is abundantly clear as laid down by the Hon’ble Apex Court that the Adjudicating Authority has to either reject or Admit the Application and cannot postulate a third option. In this matter, the application U/s 9 of the IBC has been admitted by the Order passed today, therefore, the application for referring the matter for Arbitration is not maintainable," said the NCLT.
"Accordingly, this Adjudicating Authority(NCLT) is of the considered opinion that there is no reason to deny the petition filed under section 9 of the IBC (Insolvency and Bankruptcy Code), 2016 by the Operational Creditor to initiate CIRP (Corporate Insolvency Resolution Process ) against the Corporate Debtor, since the existence of a debt and a default in the payment of debt is clearly established. Therefore, the instant Company Petition bearing CP (IB) No. 149/2023 is admitted against the Corporate Debtor and moratorium is declared in terms of Section 14 of the Code," stated the order.
The sponsorship contract between BCCI and Byju's began in 2019 when the company replaced mobile phone manufacturer OPPO as the sponsor of the Indian cricket team's jerseys. According to reports, this contract was originally set to end in 2022 but was later extended to include 2023.
However in early 2023, Byju's announced that it would not be renewing its sponsorship deal with BCCI as well as other partnerships with the International Cricket Council (ICC) and Fédération Internationale de Football Association (FIFA).
Later that year, BCCI filed its plea to initiate the insolvency process against Byju's.
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