- Supreme Court found that appeals tribunal failed to adhere to due legal procedures, necessitating a return to bankruptcy court for all parties involved.
The ruling by India’s Supreme Court, which nullified a tribunal order permitting Byju’s to settle its debts with a creditor, marks a significant turning point for the beleaguered online tutoring company.
The decision not only reinforces the company’s entanglement in the insolvency process but also signals a potential trajectory toward its failure.
Byju Raveendran, the founder of the eponymous firm, faces an uphill battle as control of the company is now firmly in the hands of a bankruptcy professional, further complicating its financial recovery.
The Supreme Court’s intervention is a notable victory for Glas Trust Company, a US-based creditor that has been vocal in opposing Byju’s settlement with the Board of Control for Cricket in India (BCCI).
Legal troubles
The ruling underscores the complexities of Byju’s financial landscape, which has been characterised by substantial debts, including Rs1.59 billion (approximately $18.9 million) owed to the BCCI.
The court found that the appeals tribunal failed to adhere to due legal procedures, necessitating a return to bankruptcy court for all parties involved.
Byju’s journey from a promising startup valued at $22 billion to its current precarious state exemplifies the volatile nature of the tech industry, particularly in the wake of the Covid-19 pandemic.
Initially lauded as a beacon of India’s burgeoning educational technology sector, Byju’s experienced explosive growth during the pandemic, only to face significant challenges as demand waned with the return to traditional classrooms.
Legal troubles in both domestic and international markets have exacerbated the company’s financial woes, leading to a precarious situation that threatens its very existence.
The insolvency resolution process in India mandates that a court-appointed professional manage the company until a creditors’ panel is established.
This panel is responsible for assessing claims from potential creditors and may subsequently invite bids from prospective buyers. Should no viable buyer emerge, liquidation becomes inevitable.
Byju’s situation reflects a broader trend among once-prominent tech firms in India, many of which are grappling with financial and legal difficulties.