Bengaluru tribunal’s latest directive adds new chapter to edtech giant’s ongoing insolvency saga, potentially impacting Tamil Nadu’s startup landscape
In a significant development for India’s startup ecosystem, the National Company Law Tribunal (NCLT) Bengaluru bench has directed the Board of Control for Cricket in India (BCCI) to present its ₹158 crore settlement proposal before BYJU’S Committee of Creditors (CoC).
This latest directive comes as part of the continuing insolvency proceedings against Think and Learn Private Limited, BYJU’S parent company.
The NCLT’s decision, announced on Monday, follows the National Company Law Appellate Tribunal’s (NCLAT) February 7 order, which had given the tribunal a one-week window to resolve BCCI’s application. The case has drawn significant attention from Tamil Nadu’s startup community, where several edtech ventures operate in BYJU’S shadow.
Under Section 12A of the Insolvency and Bankruptcy Code (IBC), the withdrawal of insolvency proceedings requires approval from 90% of the Committee of Creditors, setting a high bar for BYJU’S potential resolution.
The case’s complexity deepened in October 2023 when the Supreme Court overturned a previous settlement between BCCI and BYJU’S. The apex court rejected the arrangement, which involved Riju Raveendran, brother of founder Byju Raveendran, paying the dues from his personal tax-paid funds. The court mandated that the funds be transferred to an escrow account and referred the matter back to NCLT.
“This case highlights the increasing scrutiny of financial arrangements in India’s startup ecosystem,” says Venkatesh Kumar, Partner at Chennai-based venture law firm StartupLegal Associates. “The NCLT’s directive could set important precedents for how similar cases are handled in the future, particularly in Tamil Nadu’s growing startup landscape.”
The proceedings have been further complicated by leadership disputes within the Committee of Creditors. US-based Glas Trust and Aditya Birla Finance, which collectively hold 99.41% of the voting share in the CoC, were initially removed by the resolution professional but later reinstated by NCLT Bengaluru. Riju Raveendran’s challenge to this reinstatement was recently dismissed by the NCLAT Chennai Bench.
The case has particular relevance for Tamil Nadu’s edtech sector, which has seen rapid growth in recent years. The state hosts over 50 edtech startups, with many watching the BYJU’S case closely for its potential impact on investor confidence and regulatory oversight in the sector.
Key statistics highlight the significance of this case:
- ₹158 crore: Outstanding dues claimed by BCCI
- 99.41%: Combined voting share of Glas Trust and Aditya Birla Finance in the CoC
- 90%: Minimum CoC approval required for withdrawal of insolvency proceedings
The NCLT has also called for responses regarding allegations of improper conduct by former resolution professional Pankaj Srivastava, adding another layer of complexity to the proceedings.
“The outcome of this case could significantly influence how investors approach funding rounds and sponsorship deals in the edtech space,” notes Priya Ramachandran, CEO of Chennai-based EdTech Ventures Association. “Tamil Nadu’s startup ecosystem needs to pay close attention to these developments as they could shape future governance frameworks.”
For Tamil Nadu’s startup ecosystem, the BYJU’S case serves as a crucial lesson in corporate governance and financial management. As the state positions itself as a leading startup hub, the resolution of this high-profile case could influence investor sentiment and regulatory approaches in the region.
