Byju’s crisis: NCLT admits BCCI petition seeking insolvency proceeding against edtech firm

The National Company Law Tribunal’s (NCLT’s) Bengaluru bench, on Tuesday, admitted BCCI’s petition seeking insolvency proceedings against Byju Raveendran-led beleaguered edtech firm, Byju’s. 

This comes after BCCI had sought initiation of the insolvency proceedings against Byju’s over alleged unpaid dues of Rs 158 crore. Byju’s had a sponsorship contract with BCCI for the Indian cricket team. 

The petition was filed by BCCI last year against Byju’s’ parent Think & Learn Pvt Ltd for defaulting on Rs 158 crore of dues. It pertains to the dispute around the sponsorship rights of the Indian cricket team’s jerseys. 

The matter was registered for further hearing on November 15. It had then said that it was in conversation with the BCCI to settle the pending insolvency matter. 

It previously had three key branding partnerships with the BCCI, International Cricket Council (ICC) and Federation Internationale de Football Association (FIFA). They were all up for renewal in 2023 but were not processed. 

BYJU’S CRISIS

Meanwhile, tech investor Prosus wrote off its 9.6 per cent stake in the firm Byju’s during the financial year 2024. This makes Prosus the first to fully write off its investment in the troubled startup. Prosus cited a significant decrease in value for equity investors as the reason for the write-off. Byju’s was once valued at $22 billion in 2022 but has faced financial, legal, and operational problems that have greatly reduced its valuation. 

Additionally, a year-long probe by the Ministry of Corporate Affairs has found lapses in corporate governance at edtech firm Byju’s but has cleared it of financial fraud. The investigation did not uncover any evidence of wrongdoing such as siphoning of funds or manipulation of financial accounts by the company led by Byju Raveendran. 

According to a report in Bloomberg, the ministry found governance shortcomings that contributed to Byju’s mounting losses.

Three major investors, including Prosus and Peak XV Partners, left the Byju’s board over disagreements with Raveendran on business processes and internal controls. The investigation found that weak corporate governance and compliance practices, along with a change in the funding environment, contributed to Byju’s expanding losses.