The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) has approved a settlement between Byju's, a prominent ed-tech firm, and the Board of Control for Cricket in India (BCCI). This settlement which involves the payment of ₹158 crore in arrears will allow Byju's to exit insolvency proceedings that were initiated due to a petition from the BCCI.
Justice Rakesh Kumar Jain, presiding over the case, confirmed that the settlement has been reviewed by the Committee of Creditors (COC) and was deemed satisfactory. He noted that the source of the settlement funds was transparent and that the interests of all parties, including the Glas Trust, was preserved. The Glas Trust has the option to revive the case if needed but the settlement as it stands has been officially approved.
The settlement will be funded by Riju Ravindran, the brother of Byju's founder Byju Raveendran and a major shareholder in the company. Riju Ravindran has committed to using his personal funds to cover the arrears. These funds are derived from the sale of shares in Think & Learn, the parent company of Byju's, between May 2015 and January 2022.
The approval of this settlement followed concerns raised by US-based lenders. These lenders questioned the legitimacy of the funds being used, suspecting that they might be diverted from loans provided by them. In response, the NCLAT required Byju's to submit an undertaking confirming that the funds used for the settlement were not sourced from the term loans opposed by these lenders.
The insolvency proceedings against Byju's began when the National Company Law Tribunal (NCLT) in Bengaluru ordered the initiation of corporate insolvency resolution on June 16, 2024. This action followed Byju's default on a ₹158.9 crore payment related to a sponsorship deal with the BCCI. The NCLT's decision included suspending Byju's board and appointing an interim resolution professional to manage the company's financial obligations.
The troubles for Byju's, once a high-flying ed-tech firm valued at $22 billion, have been severe. The company faced significant challenges following the reopening of schools post-pandemic which led to a decrease in demand for its online educational services. In January 2024, BlackRock significantly reduced Byju's valuation to $1 billion.
Financial difficulties for Byju's began to mount about two years ago when it failed to meet financial reporting deadlines and fell short of revenue projections by over 50%. Compounding these issues, in February 2024, a group of investors including Prosus and Peak XV sought to remove Byju Raveendran from his position during an extraordinary general meeting.
At the heart of Byju's financial problems was the "Team Sponsor Agreement" with the BCCI established in July 2019. This agreement granted Byju's exclusive rights to brand display on the Indian cricket team's kit advertising during cricket telecasts and access to tickets for BCCI-organized matches. In exchange, Byju's agreed to pay a sponsorship fee. Although Byju's met its payment obligations through March 2022 and settled the fees for the India-South Africa series in June 2022, it failed to pay subsequent invoices. This resulted in a shortfall of ₹158.9 crore despite a bank guarantee of ₹143 crore being encashed.