Chennai:

A judicial member of the National Company Law Appellate Tribunal (NCLAT), Chennai, on Monday recused himself from hearing a plea by Byju’s Founder Byju Raveendran against the insolvency petition against his company, Think & Learn Private Ltd.

Justice Sharad Kumar Sharma, a judicial member of the Chennai bench of the NCLAT, recused himself stating that he had appeared for the Board of Control for Cricket in India (BCCI) as a senior counsel in a number of cases.

“I will not venture into this. I have been a regular counsel for the BCCI in a number of cases,” he said.

He also directed that the case be placed before the NCLAT Chairperson for the nomination of an appropriate bench.

The NCLT, Bengaluru, had ordered insolvency proceedings against Think & Learn Private Ltd following a BCCI petition claiming a default of Rs 159 crore.

The NCLT had earlier appointed Pankaj Srivastava as an interim resolution professional to oversee the management of Byju’s, temporarily suspending the power of the board of directors.

Byju Raveendran had moved the NCLAT against the insolvency proceeding order.

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The logo of Byju’s, the EdTech startup.
| Photo Credit: Reuters

Indian edtech company Byju’s is staring at insolvency proceedings on July 16 following a tribunal order, deepening a crisis that has seen the one-time market darling’s valuation plunge from about $22 billion to less than $2 billion.

Byju’s, which describes itself as the “world’s largest education technology company”, offers online tutorials on several subjects including math, physics and chemistry for school students. Its business boomed during the Covid-19 pandemic and the company’s valuation shot up from $5 billion before the pandemic to $22 billion in 2022, and it acquired several companies on the way.

It is run by its founder, Byju Raveendran, and his wife, Divya Gokulnath. Mr. Raveendran, an engineer by training whose parents were teachers, started teaching mathematics to friends and built the business as its popularity grew. He launched Byju’s in 2011 and its app in 2015.

Here is an overview of Byju’s and its troubles:

What triggered the insolvency?

The BCCI last year asked a tribunal to initiate insolvency proceedings against Byju’s for defaulting on $19 million of dues. The dispute is over payments related to sponsorship rights for the Indian cricket team’s jerseys.

Byju’s has said it wants to settle the matter, but a tribunal ruled in favour of BCCI, and appointed a resolution professional to oversee the company, suspending its board of directors.

What’s the tussle with investors?

In February, a group of shareholders, including tech investor Prosus, alleged “financial mismanagement and compliance issues” at Byju’s and called for the removal of founder and CEO Byju Raveendran, and a reconstitution of the board. “We are deeply concerned about the future stability of the company under its current leadership and with the current constitution of the Board,” the shareholders said.

Byju’s, which has denied mismanagement, says the investors don’t have the power to vote out its CEO.

In June, Prosus wrote off the value of its 9.6% stake in Byju’s, making the Dutch firm the first to fully write-off its investment in the troubled startup.

Why did Deloitte, board members resign?

Last year, Deloitte said it was resigning as auditor because the startup had delayed financial statements for the year ending March 31, 2022. Deloitte said it did not receive the necessary documents even after writing several letters to the board.

Three board members of Byju’s — representing investors Peak XV Partners (previously Sequoia Capital India), Prosus and Chan Zuckerberg Initiative — also stepped down.

Byju’s, once one of India’s premier EdTech startups, now faces insolvency proceedings. File
| Photo Credit: REUTERS

An Indian tribunal on July 16 started insolvency proceedings for EdTech firm Byju’s after the country’s cricket board complained about failure to recover $19 million in dues, dealing another blow to a company that was once India’s biggest startup.

Byju’s has suffered numerous setbacks in the past few years, leading to a crisis of investor confidence, thousands of job cuts and a collapse in its valuation from $22 billion in 2022 to less than $3 billion.

Also read: Byju’s woes: A timeline of the Indian edutech giant’s troubles at home and abroad

In this latest blow, the National Company Law Tribunal (NCLT) said “it cannot be disputed” that the parent of Byju’s, Think & Learn Private Limited, had availed itself of the services of the Board of Control for Cricket in India (BCCI) and had defaulted on roughly ₹1.59 billion.

“As we have always maintained, we wish to reach an amicable settlement with BCCI and we are confident that, despite this order, a settlement can be reached. In the meantime, our lawyers are reviewing the order and will take necessary steps to protect the Company’s interests,” a spokesperson for Byju’s said.

The NCLT appointed an interim resolution professional, Pankaj Srivastava, who will now oversee the management of Byju’s. The powers of board of directors will be suspended for now and rest with Mr. Srivastava. BCCI did not immediately respond to a Reuters request for comment.