The Supreme Court today, that is, on the 14th of August, 2024, has made the decision to put a complete stay on the order of the NCLAT. The NCLAT order declared that the insolvency proceedings between the ed-tech company BYJU’s and the BCCI will come to an end. But now this stands on hold.
What Was The Deal Between The Two Entities?
The insolvency proceedings were initiated against BYJU’s after it failed to clear dues of almost 158 rupees crore that it owed to the Board of Controllers of Cricket (BCCI). The investigation had begun against the firm in June, 2024 itself. The root of the entire cause was the team sponsorship agreement between the two entities in discussion.
What Was The Agreement?
In the year of 2019, according to an agreement BYJU’s was now to become the only company with the right to display its brand name and logo on the Indian cricket teams’ kit, for which it would be paying a hefty sum to the BCCI. A default in this promise cost deeply to the ed-tech firm and it is now facing bankruptcy challenges.
What Was the NCLAT Order?
The NCLAT order on which a stay has been put by the Supreme court basically aimed to close the insolvency proceedings and come up with a settlement between the two parties, through the payment of the 158 rupees crore in question. The sum was to be paid by Riju Ravindran who is the brother of Byju Ravindran. He also happens to be a major stakeholder in the company.
Why Was There A Stay On The Order?
This stay order was imposed as BYJU’s US based lenders- Glas Trust- opposed the decision taken by the NCLAT and filed an appeal with the Supreme Court. According to them the money that is being used to settle terms with BCCI is the sum that was borrowed from them and it should be repaid to them on a priority basis. Riju Ravindran has testified that this sum is from his personal finances and not a part of the loans, but an appeal was still filed.
This has caused the settlement to be on hold and the amount to be transferred to an escrow account till the parties are able to reach a settlement and end the insolvency proceedings.
