Businesss Business:In a blow to one-time edtech giant Byju's, the Supreme Court on Wednesday overturned the decision that had halted bankruptcy proceedings against the company. The decision states that Byju's Board of Control for Cricket in India (BCCI) It will have to follow the protocols established under the Insolvency and Bankruptcy Code (IBC) to repay its loan of ₹158 crore given to it.The order marks a significant moment in Byju's financial crisis, which has seen control of the company transferred from founder Byju Raveendran to its creditors. This decision was taken by the U.S. The news is welcome for state-based financial creditor Glass Trust Company LLC, which had challenged the previous order of the National Company Law Appellate Tribunal (NCLAT) stalling the insolvency process.
For BCCI, this decision will take it further down the ranks of operational creditors. The Supreme Court ordered that Byju's deposit the settlement amount of Rs 158 crore already agreed with BCCI in an escrow account under the supervision of the Committee of Creditors (CoC). The direction is in line with the Court's September 26 order, in which the Interim Resolution Professional (IRP) was directed to maintain status quo and refrain from holding CoC meetings until the judgment is pronounced.
The Court emphasized that BYJU'S and BCCI can continue with their settlement, but they must do so under the strict monitoring of the IRP and COC, following the established procedures outlined in the IBC. What will happen next? The case has been sent back to the NCLT for a fresh decision, with clear directions that any settlement application should be submitted through the IRP rather than through the company's management. Shiv Sapra, partner, Kochhar & Co, said, “Since the Supreme Court has made it clear that the powers vested under Rule 11 cannot be used to circumvent due process, the settlement will now be formally referred to the NCLT. The solution should be presented by a professional.”
SC rebukes NCLAT's encroachment
Chief Justice D.Y. A three-judge bench led by Chandrachud criticized the NCLAT for abusing its inherent powers under Rule 11 of the NCLAT Rules, 2016, for allowing the bankruptcy application to be withdrawn. The top court emphasized that where specific procedures for withdrawal exist, the NCLAT cannot circumvent them by invoking its inherent powers. The court clarified that once the bankruptcy application is accepted, only the IRP has the authority to file a recall request on behalf of the debtor, not the parties involved.
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