- US lender Glass Trust opposes the settlement and repayment is tainted and being funded with stolen money.
- IRP, monitoring Byju’s insolvency proceedings, raised alarms regarding the company’s transparency and cooperation.
The Board of Control for Cricket in India (BCCI) has confirmed a settlement on the repayment of over Rs158 crores owed under sponsorship agreements.
On Wednesday, during the proceedings at the National Company Law Appellate Tribunal (NCLAT), it was disclosed that Riju Raveendran, the brother of Byju’s founder, had initiated the repayment by contributing Rs50 crores.
An additional Rs25 crores is expected to be paid by the Friday, with a final payment of Rs83 crores due by August 9.
The development comes in the context of Byju Raveendran’s appeal against insolvency proceedings initiated by the National Company Law Tribunal (NCLT), seeking to control the unfolding financial turmoil.
However, the apparent resolution faced immediate challenges from US lender Glass Trust Inc, which opposed the settlement on the grounds of a substantial claim related to guarantees worth Rs8,000 crores.
Misconduct
Senior Advocate Mukul Rohatgi, representing Glass Trust, accused Byju’s leadership of misconduct, claiming that funds intended for legitimate business operations had been improperly diverted.
His assertions were underscored by allegations from a US court indicating potential misappropriation of over $500 million. These allegations raise critical questions about the financial integrity of Byju’s operations and the ethical responsibilities of its management.
The BCCI, represented by Assistant Solicitor General Tushar Mehta, emphasised that its claim was comparatively minor and should not impede the settlement process between itself and Byju’s.
The perspective suggests a willingness from the BCCI to facilitate a resolution, provided that the terms are defined clearly and do not jeopardise the interests of financial creditors like Glass Trust.
Need for clarity
Such negotiations encapsulate the complexities of corporate bankruptcy, where the prioritisation of creditors can lead to contention among various tiers of stakeholders.
Moreover, Riju Raveendran’s assertion that the funds for repayment would come from sources independent of Byju’s corporate resources further complicates the narrative.
His statement was aimed at mitigating allegations of misconduct and reinforcing the legitimacy of the repayment structure. This crucial distinction emphasises the legal boundaries and liabilities of shareholders versus the corporate entity itself, reflecting the intricate legal framework encompassed within the Insolvency and Bankruptcy Code (IBC).
Meanwhile, the interim resolution professional (IRP) monitoring Byju’s insolvency proceedings raised alarms regarding the company’s transparency and cooperation.
Indicating a lack of access to essential data and resources, the IRP reported unsettling findings that corroborate the precarious state of Byju’s operations.
The IRP’s observations amplify concerns that the company’s financial mismanagement could impede a fair resolution process, potentially heightening scrutiny from creditors and regulators alike.
As the NCLAT adjourned the hearing, the expectation for Byju’s to furnish an affidavit clarifying the segregation of funds between financial and operational creditors highlighted the need for clarity moving forward.
The tribunal’s insistence on such documentation underscores the complexities inherent within insolvency proceedings, especially when differing claimants are involved.