Ahlawat & Associates’ Post

🚨 Supreme Court Intervenes in BYJU’S Insolvency Case 🚨 In a significant turn of events, the Supreme Court has stayed the NCLAT decision to close the insolvency case against BYJU’s following its settlement with the BCCI. The Apex Court has revived the insolvency proceedings, directing that the amount paid by BYJU’S to the BCCI be held in a separate escrow account pending further review. This decision underscores the importance of thorough judicial scrutiny in corporate insolvency matters, ensuring that all stakeholders’ interests are adequately protected. The case highlights the ongoing challenges faced by BYJU’s and the broader implications for the edtech sector in India. #BYJUS #SupremeCourt #Insolvency #EdTech #CorporateLaw

Byju's creditors have taken legal action against the resolution professional (RP) in the lead-up to hearings involving Aditya Birla Finance and Glas Trust on 24 and 25 September. The conflict between the creditors and the RP could affect the resolution process. Glas Trust LLC, excluded from the committee of creditors (CoC) by RP Srivastava, is now seeking to be reinstated. After the Bengaluru bench of the NCLT denied relief on 4 September, Glas Trust escalated the matter to the Supreme Court. Our Partner Smiti Tewari explains in this article published in LiveMint, that the RP forms the CoC, and any lender excluded or dissatisfied with their voting share can appeal to the NCLT. While disputes may affect timelines, the CIRP will proceed unless the Supreme Court orders a stay. Read the article to know more! https://lnkd.in/ga2TEkEn #KLA #SakateKhaitan #BYJU #InsolvencyLaw #CorporateRestructuring #NCLT #BankruptcyProceedings #CreditorsRights #CIRP

The whole IBC process is designed to ensure that once a company is admitted to insolvency proceedings, it is protected from any other legal suit/ security enforcement so that company’s operations are unaffected and recovery is maximised. For this reason, after admission, the corporate debtor is generally not allowed to exit the insolvency proceedings or enter into any bilateral settlement with any creditor. IBC also enshrines the principle that while all unpaid creditors have an equal opportunity to take a debtor to insolvency, it puts secured creditors at a higher pedestal as compared to unsecured or operational creditors. However, in case of Byju’s, the insolvency court allowed BCCI, an operational creditor and Byju’s, the corporate debtor to exit the insolvency process even after admission and enter into a bilateral settlement to pay off its dues of Rs. 158 crore, even as senior secured lenders who are struggling to recover their loan of Rs. 4400 crore from Byjus, are left wondering as what was happening. Lenders have now approached Supreme Court to quash NCLAT order. Apparently, NCLAT permitted the settlement after recording an undertaking that the repayment is being personally funded by Riju Raveendran (brother of Byju Raveendran) and not taken from money that should go to financial creditors. In this regard, you can read an interesting news article in NDTV Profit as given in the comment section.

In our recent publication on GNLU Blog on Corporate Laws, me and Ekta Gupta have navigated through the shortcomings in the IBC framework by analysing the recent Byju's tussle with insolvency. The article seeks to portray whether IBC has attained the object with which it was conceptualized with, i.e. equitable treatment of stakeholders. The same can be accessed here : https://lnkd.in/g9h4Dygk Do let us know your inputs on the same.

Supreme Court Overrules NCLAT’s Closure of Insolvency Proceedings Against Byju’s A few days back, the Hon’ble Supreme Court overturned the NCLAT’s Order, which closed insolvency proceedings against Byju’s (Think and Learn Pvt Ltd) based on a ₹158 crore settlement between Byju’s and the BCCI. The Hon’ble Apex Court ruled that the NCLAT erred by invoking its inherent powers under Rule 11, as the Insolvency and Bankruptcy Code prescribes specific procedures for withdrawal. The Hon’ble Court highlighted that any withdrawal application should be filed by the Interim Resolution Professional (IRP) and not by direct party agreement. Furthermore, the Supreme Court emphasized that NCLAT's role is not perfunctory in such applications, reiterating that no formal withdrawal request was made in this case. The Supreme Court stressed strict adherence to procedural requirements for withdrawing insolvency applications, underscoring the IRP’s role and protecting creditor interests. #SupremeCourt #ByjusInsolvency #InsolvencyProceedings #BCCI #IBC #NCLAT #Byjus #InsolvencyLaw #IndiaLaw #LegalUpdate

🚨 **Can NCLAT Override Established Insolvency Procedures?** A recent ruling in the Byju's case has sparked an important debate before the Supreme Court. The NCLAT accepted a settlement between Byju’s and the BCCI, effectively halting the Corporate Insolvency Resolution Process (CIRP) without invoking Section 12A of the Insolvency and Bankruptcy Code (IBC) or Regulation 30A of the CIRP Regulations, which typically govern the withdrawal of CIRP. 💡 The key question is: *Is this permissible?* In a previous case, **Ashok Rajani v. Beacon Trusteeship & Ors**, the Supreme Court made it clear that settlements can't be pre-empted before a Committee of Creditors (CoC) is constituted, as there could be claims against the corporate debtor from third parties. Yet, in Byju's case, an interim NCLAT order stayed the formation of the CoC, even while the Section 12A application was pending with the NCLT. This raises a critical issue: *Can NCLAT allow a settlement using its inherent powers without adhering to the specific provisions of the IBC?* Let’s not forget the **Manohar Lal v. Seth Hiralal** judgment, where the Supreme Court held that courts can't use inherent powers to override statutory provisions. A similar sentiment was echoed in **SEBI v. Bharti Goyal**, where the Supreme Court struck down an order by the Securities Appellate Tribunal (SAT) for reducing a penalty, stating that even tribunals created under statutes must act within the boundaries of law. In my opinion, while NCLAT’s decision may seem pragmatic, it bypasses the statutory framework that governs CIRP. Following the established contours of the IBC ensures consistency, fairness, and transparency in the process. 🔍 This case could set a significant precedent for how we interpret the interplay between tribunal discretion and statutory mandates. #IBC #NCLAT #Byjus #InsolvencyLaw #SupremeCourt #CorporateLaw #LegalDebate Chinmay Lenka Nidhi Dayani Ramanuj Mukherjee Abhyuday Agarwal Priyanka Karwa Komal Shah Abhipsa Anamika Nandini Pandey

I would like to bring to your knowledge a very recent order in Byju’s case NCLAT, Chennai on August 2 accepted the settlement agreement between Byju’s and the Board of Control for Cricket in India (BCCI) and set aside the order directing insolvency proceedings against Think and Learn Private Limited, (Byju’s parent company). NCLT, Bengaluru had ordered insolvency proceedings against Think & Learn Private Limited on July 16, 2024, in a case filed by BCCI (operational creditor) claiming a default of ₹158 crore. If you read the order, you will notice that NCLAT erred in allowing a settlement between Byju’s and BCCI after initiating insolvency proceedings, without following the prescribed process under the Insolvency and Bankruptcy Code (IBC). Don’t you think this decision undermines the principles of the collective resolution, moratorium, and equitable distribution of assets, which are fundamental to the IBC. The NCLAT's use of its inherent powers in this case was inappropriate and departed from the established procedures for settlement under the IBC. I hope that this decision does not set a dangerous precedent, allowing operational creditors to use insolvency courts as a means of recovering debts, rather than pursuing genuine corporate restructuring. I would like to emphasize the need for insolvency judges to exercise restraint and adhere to the principles of the IBC to maintain its effectiveness in resolving corporate insolvencies. I have intentionally not shared the facts of this here as it is available in the public domain. The Supreme Court stayed the above NCLAT’s order and the matter will be heard on 23rd August, 2024. Finally, everything gets decided by the SC, does that mean that law is not followed by courts below the apex court?

📉BYJU’S Faces NCLT Notice on Insolvency Plea by US Lenders. 🚨Summary: - BYJU’S faces further legal challenges as the NCLT issues a notice in response to a plea filed by US-based non-bank loan agency Glas Trust Company LLC, seeking insolvency resolution. - Glas represents lenders who lent money to BYJU’S US entity, currently undergoing bankruptcy hearings in Delaware. - The Indian entity of BYJU’S guaranteed a loan worth $1.2 Bn for its US counterpart, prompting legal action when repayment was not met. 📰Key Points: - The NCLT directive follows a reserved judgment on a petition filed by four investors against BYJU’S CEO and promoters under the Companies Act. - Glas Trust, representing over 100 lenders to BYJU’S US entity, initiated legal action after the Indian entity failed to respond to loan repayment requests. - BYJU’S faces its fourth insolvency case in less than six months, amidst legal battles involving board reconstitution and CEO removal. - Concerns also arose over BYJU’S subsidiaries' control, financial transparency, and disputes with the BCCI regarding sponsorship rights. - The Karnataka High Court temporarily halted decisions made during an EGM initiated by investors, pending further hearings. - The NCLT has requested written submissions from involved parties within three days, adding to BYJU’S legal challenges. #BYJU’S #NCLT #Insolvency #LegalChallenges #GlasTrust #USLenders #Edtech #LegalDisputes #StartUpNews #BusinessNews #MicroShots #NewsUpdates

The September edition of our monthly ‘Restructuring & Insolvency Newsletter’ discusses several topical judgments by NCLT, NCLAT and the courts. The team (Abhirup Dasgupta, Ishaan Duggal, and Ruchi Goyal) has also analyzed some of the Resolution Plans approved by the NCLT recently, and provided details on the companies admitted to insolvency or directed to be liquidated in August 2024. Statutory Updates -- 1. Discussion Paper on “MSME Registration and disclosure framework under CIRP” dated August 23, 2024 Recent judgments -- 1. V.S. Palanivel v P. Sriram CS, Liquidator – Supreme Court 2.  Vijay Kumar Singhania v Bank of Baroda & Ors. [NCLAT, New Delhi 3.  Asha Chopra & Ors. v M/s Hind Motors India Ltd – NCLAT, New Delhi  Recent deals -- 1.  Resolution of Lanco Amarkantak Power Ltd 2. Resolution of Monarch Brookefields LLP Companies admitted to insolvency in August 2024 Companies admitted to insolvency Companies directed to be liquidated    Click here to read more: https://lnkd.in/g_kHtics #restructuring #insolvencyandbankruptcy #statutory #update #judgements #orders #deals #liquidation #insolvency #resolutionprocess #nclat  #india #Law #lawstudents #lawyers #lawfirmmarketing #lawyerlife #lawyering #legalinsights #generalcounsel #lawsuits  #india #inhousecounsel #legalprofession #legal #law #lawyers #lawfirms #lawdotasia

Our Partner, Shiv Sapra, was quoted in Live Mint (Mint), providing insights on the Supreme Court’s significant ruling in the Byju’s insolvency case. Shiv’s analysis highlights the critical implications of procedural overreach in insolvency proceedings. Read the full article here: https://lnkd.in/e-rptZ7d #KochharAndCo #InsolvencyLaw #SupremeCourtRuling #Byjus #ShivSapra #BusinessAndLaw