India's highest court on Wednesday overturned an appeals tribunal order that permitted the resolution of a payment dispute between the Indian cricket authority and the education technology firm Byju's, granting a victory to its U.S. lenders who had opposed the settlement and the suspension of insolvency proceedings.
Byju's was undergoing insolvency proceedings after a complaint from India's cricket governing body, alleging unpaid sponsorship fees. The two parties later resolved their dispute, and the appeals tribunal halted the insolvency process. However, in a ruling issued on Wednesday, the Supreme Court of India stated that the National Company Law Appellate Tribunal's earlier decision to allow the settlement was erroneous because the company's founders could not directly approach the appeals tribunal for settlement once insolvency proceedings had commenced.
The court emphasized that the settlement application should have been filed through the company's insolvency administrator and before the National Company Law Tribunal (NCLT). A spokesperson for Byju's declined to comment on the recent ruling. Glas Trust, which represents U.S. lenders claiming $1 billion in dues from a loan to Byju's, did not immediately respond to a request for comment. Glas Trust had appealed the original settlement, accusing the founders of Byju's of misusing the loan, a claim previously denied by Byju Raveendran.
The startup, valued at $22 billion in 2022, has faced challenges including boardroom departures, an auditor resignation, and a public dispute with foreign investors over alleged mismanagement. The company has denied any wrongdoing. Raveendran spoke to the media last week for the first time since the insolvency case began, expressing optimism about a comeback. "Whatever is coming, I will find a way out," he said. Wednesday's order also instructed that the settlement amount paid by Raveendran's sibling and co-founder Riju be deposited with the lenders panel overseeing the insolvency process against the company.
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