Byju's Financial Mysteries: What Happened to the Borrowed Money?

Significant changes have occurred in the relationship between Byju's and the Board of Control for Cricket in India (BCCI), especially concerning the outstanding sponsorship dues. In March 2019, Byju's signed a sponsorship agreement with BCCI. The agreement was initially for three years. However, it was later extended without a formal contract. The business paid on time until September 2022; then, there were disagreements about payments from October 2022 to March 2023. After recovery attempts failed, the BCCI filed a lawsuit, claiming that Byju's owes over ₹158 crore (about $19 million) in unpaid sponsorship payments. The former insolvency initiator, BCCI, went to NCLT to request that its petition against Byju's be withdrawn. The BCCI action comes after the Supreme Court invalidated an NCLAT verdict permitting a settlement between BCCI and Byju's on 23 October. Lenders have resisted BCCI's request to withdraw, arguing that the CoC should decide to make such a plea.

Byju Raveendran, the company's founder, has accused William R. Hailer, one of Byju's partners, of attempting to influence the court system. According to Hailer, Raveendran urged him to leave the US to avoid testifying in court and promised him a job. This can be interpreted as an effort to sway the court case. The US court looks into these claims and evaluates possible lawsuits against Byju and its creator. Now, lenders that provided funds to Byju's Alpha are attempting to get their money back. They think that the parent firm, Byju's, should be responsible for repaying this debt. One of the main problems in this case is the $533 million that needs to be added. According to lenders, this money was borrowed but has since vanished. Legal disputes and inquiries into Byju's financial activities have resulted from this. In essence, Byju's is dealing with a complicated financial dilemma, and the company's future is still in the air.

Byju's Legal Advancements

• By the Insolvency and Bankruptcy Code (IBC), BCCI filed an insolvency petition against Byju's parent business, Think & Learn Pvt Ltd, in September 2023. The petition sought to declare Byju's insolvent because the debts had not been paid.

• Byju's founders recently declared that they had agreed to pay off the outstanding debt. A portion of the payment has already been made, and other instalments are planned for early August 2024, they told the National Company Law Appellate Tribunal (NCLAT).

• Byju's US lenders criticised the settlement, claiming that the money intended to reimburse BCCI should go to them instead. They allege that Byju Raveendran, the CEO of Byju's, is putting BCCI payments ahead of staff paychecks and other commitments.

• The NCLAT has postponed talks on the lenders' concerns about the settlement but has yet to render a decision on Byju's challenge to the insolvency procedures. This demonstrates the continuous hostilities between Byju's creditors and management.

Does Byju's get an exemption from the BCCI case?

If the insolvency petition is dismissed, the founders can regain control of the company, access blocked bank cash, and devise a strategy to repay creditors. The lawyer warned that a lot depends on future hearings and rulings and said that the NCLT's relief is contingent on the rider that no other insolvency petition is pending in Indian courts or tribunals. NCLT took up the matter on November 18 and 19; a final ruling is anticipated by 26 November at the latest. Byju Raveendran claims that his business plans to reimburse BCCI and other debtors. He notes that his brother Riju is prepared to pay the cricket organisation Rs. 158 crores, which he has raised from his money. However, when GLAS, an international organisation, was permitted to interfere in Indian court procedures, the payoff was put on hold.

According to Raveendran, a USD 1.2 billion loan first given to the company's US division by two US banks was split up among other lenders in the secondary market, requiring the borrower's approval. In the US courts, he argued that GLAS is a trustee for lenders who are not authorised to be on the term loan table and want to pay back a five-year loan within three years. The insolvency withdrawal petition may offer some hope amidst the gloom that has engulfed Byju's as the game gets more intense off the field. Its co-founder needs to keep fighting the good fight, and if he can persuade creditors that he intends to pay, they might decide to declare, similar to BCCI.