The Bengaluru bench of the National Company Law Tribunal (NCLT) on Tuesday allowed bankruptcy proceedings against Edtech firm Byju's after it failed to pay Rs 158.9 crore to the cricket board BCCI. The NCLT has appointed Pankaj Srivastava as an interim resolution professional, suspended Byju's board of directors and frozen its assets.
The company's founder and CEO Byju Raveendran will have to report to the resolution professional. Meanwhile, Byju's has said that it was hopeful to reach "an amicable settlement" with the BCCI. However, sources suggest that the Edtech firm is also planning to challenge the order before NCLT
A Byju's spokesperson said, "As we have always maintained, we wish to reach an amicable settlement with BCCI and we are confident that, despite this order, a settlement can be reached. In the meantime, our lawyers are reviewing the order and will take necessary steps to protect the company’s interests."
Byju's became Indian cricket team sponsor in 2019
Notably, Byju's had previously sponsored the Indian cricket team. On July 25, 2019, Byju's entered into a 'Team Sponsor Agreement' with BCCI. According to the agreement, Byju's got exclusive rights to display its trademark and brand name on the Indian cricket team kit. According to NCLT, it also got the right to place advertisements during cricket series telecasts and hospitality and non-hospitality tickets for every ticketed match organised by BCCI. In return, the company had to pay a fee to BCCI.
"As consideration, the Corporate Debtor (Byju's) was required to pay a fee to the Operational Creditor (BCCI)," it said. "The Corporate Debtor was the Sponsor of the Indian cricket team as per the above arrangements and availed the Services for a period up until March 31, 2023", NCLT observed.
The tribunal observed that after March 31, 2022, Byju's paid the full fee only against one invoice for the India-South Africa cricket series, which was held in June 2022. The concerned invoice amounted to Rs 25.35 crore. Byju's failed to pay for further invoices.
Rs 158.9 crore remains unpaid
Subsequently, a bank guarantee of Rs 143 crore was encashed, which also fell short of the total liabilities as the sponsorship fee for series/tours including that of South Africa, Australia, Sri Lanka and New Zealand, Asia Cup and ICC T20 WC between August 2022 to January 2023 amounted to Rs 158.9 crore remain unpaid.
"It cannot be disputed that the Corporate Debtor has availed the services of Operational Creditor," the NCLT order said. "Corporate Debtor had never disputed the fact that it was required to pay the agreed Fee as per the arrangement between the parties. However, despite having acknowledged the dues, the Corporate Debtor has failed to pay and instead, the Corporate Debtor repeatedly kept requesting the Operational Creditor for an extension of time for payment," the NCLT added.
(With PTI Inputs)
ALSO READ | RBI revises norms, asks banks to hear borrowers before classifying account as fraud
