After a torrid few quarters in which it has locked horns with its investors, customers, creditors and even the government, Byju’s is officially in bankruptcy.
The National Company Law Tribunal has admitted BCCI’s petition seeking insolvency proceedings against beleaguered ed-tech giant Byjus. The BCCI had sought initiation of insolvency proceedings against Byju’s over alleged unpaid dues of Rs 158 crore under their sponsorship contract for the Indian cricket team. With insolvency proceedings being iniated against it, Byju’s, which was once India’s highest-valued startup, is officially in bankruptcy.
As per the IBC, the control of the company will now be taken from the current management and will be given to the creditors of the company. Furthermore, no assets of Byju’s can be transferred while the company is in CIRP. IBC also prohibits the institution of any suits or pursuing of any existing cases against Byju’s.
BCCI had taken Byju’s to court in December last year over unpaid dues of the team India sponsorship. Byju’s had become the chief sponsor of the Indian national cricket team in 2019, having replaced Chinese phonemaker Oppo. At that point, it had signed a three-year-long contract with the BCCI, and was slated to remain the chief sponsor till 2022. Byju’s, though, had extended its contract for another year till 2023. Around this time, however, Byju’s had found it hard to raise further funds, and had then chosen to withdraw from the sponsorship. BCCI had then replaced Byju’s with fantasy games platform Dream11. But BCCI said that it was still owed Rs. 158 crore from the transaction, and had taken Byju’s to bankruptcy court over it.
With Byju’s being unable its dues, the NCLT has now initiated insolvency proceedings against it. Insolvency proceedings refer to the legal process that occurs when an individual or organization is unable to pay their debts as they become due. An insolvency process can help lenders recover dues through processes like compulsory liquidation, restructuring, or bankruptcy.
But with NCLT admitting insolvency proceedings against Byju’s, founder Byju has lost control of his own company. Unless there’s an appeal, this means that Byju Raveendran can no longer call the shots at the business he’d founded all the way back in 2011, and given it its name. But a tumultuous few quarters appear to have undone all the hard work Raveendran had done over a decade, and Byju’s is now controlled by its creditors instead of the founder himself.