The settlement of the dispute creates scope for Byju’s to escape insolvency.The once high-flying startup, however, has been denied immediate reprieve by the appellate tribunal.
Founder & CEO Byju Raveendran’s brother & company board member Riju Ravindran has raised funds to clear the dues, the first tranche of which amounting to Rs 50 crore has been paid. Byju’s counsel said that the money is not coming from the corporate debtor’s (Byju’s) account and nothing “precludes him (Riju) from making this payment”. The full amount will be paid in three tranches by Aug 9.
The NCLAT deferred accepting the settlement and instead directed Byju’s to file an undertaking (to the court), providing the source of funds to BCCI after the company’s US-based lenders argued that the source of the money is “tainted” and the court should not “bless” this transaction of settlement.
Senior lawyer Mukul Rohatgi, appearing for Byju’s overseas lenders, questioned the company’s and its promoters’ ability to pay the funds to BCCI when they couldn’t even pay salaries to employees. The missing $533 million (part of the $1.2-billion term loan proceeds) which the lenders have accused Byju’s of hiding was once again at the forefront of the legal argument put forth by them at the NCLAT.
“The missing $533 million is likely the debtor’s only way to pay creditors. This is my money,” Rohatgi said. The lenders also argued that payment of operational creditor (BCCI) over financial creditors violates the provisions of the Insolvency and Bankruptcy (IBC) Code. The court adjourned the case to Aug 1.
TOI had reported that BCCI and Byju’s were close to resolving the dispute and the company has transferred Rs 50 crore to BCCI on Tuesday. BCCI’s lawyers said that the board doesn’t condone any kind of illegal activity and the first tranche of payment has been made to them by way of banking channels.
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