The tribunal has appointed an interim resolution professional to oversee Byju’s operations until a committee of creditors can be formed. This effectively suspends the current management and freezes the company’s assets.
What is Byju’s vs BCCI dispute about
The dispute stems from a jersey sponsorship deal signed by Byju’s and the BCCI in 2019. While payments were made until September 2022, the edtech company allegedly defaulted on obligations from October 2022 to March 2023.
Byju’s has expressed its desire to settle the matter amicably with the BCCI and plans to challenge the NCLT’s decision in a higher court. However, the insolvency proceedings cast a shadow over the company’s future and could impact numerous other legal cases it is currently facing.
What bankruptcy proceeding are a setback for investors as well
The decision comes as a setback for investors too, many of whom such as Prosus had written off their investment, as the company will be taken over by a new entity called a resolution applicant. Post NCLT proceeding, Byjus will be managed by a committee of creditors with the management and the shareholders having no say. Byju’s debtors will have to wait for resolution to recover their dues. A failure to find a resolution applicant will push the company into liquidation.