Riju Raveendran has raised ₹158 crore to repay BCCI, Byju’s tells appeals tribunal

Struggling edtech Byju's on Wednesday sought to fend off bankruptcy by settling dues with India's cricket board, a move that faced stiff resistance from its US lenders.

Riju Raveendran, younger brother of the edtech's founder Byju Raveendran, has raised ₹158 crore to pay the Board of Control for Cricket in India (BCCI), Byju's informed the company law appeals court. Byju's also agreed to submit an undertaking that this money came from Riju, not Byju's, after US lenders questioned its source.

Byju's paid BCCI ₹50 crore on 30 July, and will pay the rest on 2 and 9 August, its counsel Arun Kathpalia told the National Company Law Appellate Tribunal (NCLAT). However, Glas Trust Inc., which represents some of Byju's US lenders, opposed the settlement, highlighting its claim to ₹8,000 crore which was disbursed to Byju’s US subsidiary. The money “has disappeared”, said senior lawyer Mukul Rohatgi, appearing for Glas Trust.

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It was BCCI, one of Byju's operational creditors, which had taken the company to the bankruptcy court for payment default. Under the Insolvency and Bankruptcy Code (IBC), financial creditors must be repaid before operational creditors. If NCLAT approves the settlement between Byju's and BCCI, the bankruptcy suit may be dropped, and the company may remain in the hands of Byju Raveendran.

Citing a Delaware court judgement, Rohatgi said Byju Raveendran and his edtech have diverted more than $500 million. “We want to know if Byju’s coaching centres are closed... if they are unable to pay the staff, then where is this money coming from? The money should come to us,” he added.

Creditors at odds

Tushar Mehta, representing the BCCI, said the board's claim of ₹158 crore was relatively small and that Glas Trust should independently seek an order in the matter. “Let (Glas Trust) not come in the way of our two parties settling the issue," Mehta said, adding the settlement would not be paid by Byju Raveendran or his company.

Kathpalia, Raveendran's counsel, said Riju Raveendran had independently raised the money. “He is the largest shareholder of the company… There is no order which prevents him from making this payment; therefore, no one is being prejudiced,” Kathpalia said. He said creditors such as Glas Trust could only object if the money was coming from the corporate debtor's account (in this case, Byju's).

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Rohatgi said the money, which has come in at a time Byju's has not been paying salaries, belongs to the lenders, urging NCLAT not to sanction the settlement. "Byju and his brother have conspired to siphon off more than $500 million; it is our money that was withdrawn by them," Rohatgi said.

Mehta said BCCI will not condone any kind of round-tripping or illegal activities, pointing out the money came through banking channels. To this, Rohatgi insisted that Byju's should show that it is coming from a bank account.

Pooja Mahajan, counsel for the interim resolution professional, told the court that it has been 16 days, and they haven't got any access to Byju's. "The coaching centers are shut. The employees are not turning up in office, the IT head is not responding. I managed to find two laptops but all the data has been deleted," Mahajan said.

Byju's had filed the appeal in NCLAT to try and halt the formation of a committee of creditors (CoC), as this would make it harder for the company to exit bankruptcy. On Wednesday, Byju's lenders told NCLAT that they will not fom a CoC until the matter is disposed of on Thursday.

Byju's had raised $1.2 billion in November 2021 from a group of lenders in the US, but began defaulting on payments in June 2022. The amount was raised specifically for its US expansion and could not be transferred to India under the terms of the agreement.

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The lenders have since sued Byju's to recover their money. Last year, they took control of Byju's US subsidiary Alpha, which held the bulk of the money. However, days before a trustee appointed by the lenders was set to take control of the subsidiary, Byju's siphoned out more than $500 million, the lenders have alleged.

Employees rush to file claims

On Monday, Mint reported that current and former employees of Byju’s, once India’s most valuable startup, were racing against time to claim unpaid salaries and other dues after the edtech company was admitted to insolvency earlier this month. With a deadline of 31 July for filing such claims, Byju’s employees have appointed legal professionals and law firms to recover their salaries and benefits.

More than 800 Byju’s employees have formed a WhatsApp group to explore ways to recover their dues from the company. About 60 of them were in the final stages of filing their claims with the help of Bengaluru-brd law firm Canvas Legal, the report noted. Led by Rajat Singh, a former Byju’s tutor, they had filed a demand notice with NCLT on 4 July. However, the case was put on hold along with other pending lawsuits before Byju’s was admitted to insolvency.