The Supreme Court on Thursday refused to stay the operations of the Committee of Creditors (CoC) formed in the insolvency resolution process against ed-tech company Byju’s.
A Committee of Creditors (CoC) is a group of people who represent a company’s creditors during a bankruptcy proceeding or insolvency process.
The apex court had on August 14 revived the insolvency process against Byju’s. It had stayed the August 2 order of the National Company Law Appellate Tribunal (NCLAT) allowing the ed-tech company’s approximately Rs 158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI).
A Bench of Chief Justice of India (CJI) DY Chandrachud, along with Justices JB Pardiwala and Manoj Misra, on Thursday said they would hear the case on merits first and not pass any order to restrain the CoC meetings.
“If we dismiss the appeal, then everything goes. If we dismiss their appeal, they cannot say, now go under section 12A. We need to hear on merits,” the bench said.
Section 12A of the Insolvency and Bankruptcy Code (IBC) allows withdrawal of an insolvency application against a corporate debtor (in this case, Byju’s) if at least 90% of the CoC approves.
The matter will now be heard on August 27.
The court was hearing an appeal filed by lenders challenging the decision of NCLAT to close insolvency proceedings against the parent company of Byju’s Think & Learn.
The appellate tribunal had, in its August 2 order, said the settlement was being arrived at before the Committee of Creditors could be formed, considering the source of the money (for settlement) was not in dispute, and did not have a reason to keep the company in the insolvency process.
Byju’s US-based lenders had opposed the settlement. They had told NCLAT that the money being used for the repayment was tainted as it was part of $533 million that had gone “missing.”
Riju Raveendran, brother of the company’s founder Byju Raveendran and its board member, had told the NCLAT that the money paid to the BCCI was “clean.” His counsel had told the court that the money paid to BCCI was not part of the “missing” $533 million as alleged by the lenders. The missing money is at the heart of a fight between the US lenders and Byju’s parent company, Think & Learn.
A day after the NCLAT order gave Byju control of his company, he filed a caveat in the Supreme Court to be informed if the US lenders decided to appeal against the order.
US lenders, such as non-bank loan agency Glas Trust Company LLC and others, had thereafter filed an appeal in the Supreme Court.
Byju’s counsel had told the apex court that 98% of the CoC are representatives of Glas Trust Company. So no prejudice would be caused if the CoC meeting was deferred till Tuesday, the next hearing date, he added.
Solicitor General Tushar Mehta supported this argument and said that an interim order was necessary to “balance the equities.”
However, the CJI refused to entertain their arguments and posted the matter to be heard on merits.
First Published: Aug 22 2024 | 7:19 PM IST
