On Wednesday, the Supreme Court of India overturned the National Company Law Appellate Tribunal’s (NCLAT) approval of a ?158.9 crore settlement between edtech company Byju’s and the Board of Control for Cricket in India (BCCI). This ruling was made after US-based creditor Glas Trust Company LLC appealed to participate in the ongoing insolvency proceedings involving Byju’s. The court, led by Chief Justice DY Chandrachud and Justices JB Pardiwala and Manoj Misra, determined that Glas Trust has a legitimate interest in the case and cannot be considered an unrelated party. As part of the ruling, the ?158 crore payment will be placed in a separate escrow account managed by a committee of creditors.
The dispute arises from a ?160 crore sponsorship deal between Byju’s and BCCI, which is set to expire in November 2023. The BCCI requested an extension until March 2024 to secure a new sponsor for the upcoming financial year. Due to financial challenges, Byju’s decided not to renew its contracts with BCCI, as well as with the International Cricket Council (ICC) and FIFA, leading to this contentious settlement.
Glas Trust, which represents lenders owed approximately $1.2 billion by Byju’s, raised concerns about the legitimacy of the payment to BCCI made by Byju Raveendran’s brother, Riju Ravindran, who had pledged to cover the company’s dues personally. Solicitor General Tushar Mehta, representing the BCCI, expressed concerns regarding how the court’s decision could impact settlement frameworks in insolvency cases, highlighting that settlements were historically favored by the courts prior to the introduction of Section 12A of the Insolvency and Bankruptcy Code in 2018.
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