On Tuesday, the Bengaluru bench of the National Company Law Tribunal (NCLT) granted the BCCI's plea for insolvency proceedings against the struggling edtech company, Byju's, run by Byju Raveendran. This comes after the BCCI requested that Byju be placed under bankruptcy due to purported unpaid debts of Rs 158 crore. The BCCI and Byju's have a sponsorship agreement for the Indian cricket squad.
The BCCI filed a case last year against Think & Learn Pvt Ltd, the parent company of Byju, for nonpayment of Rs 158 crore in arrears. It has to do with the disagreement over the Indian cricket team's shirt sponsorship rights.
On November 15, the case was set for further hearing. Subsequently, it declared that it was in discussions with the BCCA to resolve the outstanding bankruptcy issue. The BCCI, International Cricket Council (ICC), and Federation Internationale de Football Association (FIFA) were its previous three major branding partners. In 2023, they were all eligible for renewal, but no processing took place.
THE CRISIS OF BYJU'S
In the meantime, Prosus, a tech investor, wrote down its 9.6% ownership in Byju's during the 2024 fiscal year. Prosus is now the first company to completely write off its stake in the struggling enterprise. Prosus explained the write-off by pointing to a large decline in stock investors' value. Byju's had an initial market worth of $22 billion in 2022, but operational, legal, and financial issues have significantly lowered that amount.
Furthermore, the edtech company Byju's was found to have corporate governance flaws after a year-long investigation by the Ministry of Corporate Affairs, which also cleared the company of financial misconduct. No proof of bank account manipulation or money siphoning by the Byju Raveendran-led firm was found throughout the inquiry.
A Bloomberg article claims that the ministry discovered governance flaws that led to Byju's increasing losses. Disagreements with Raveendran on internal controls and business procedures led to the departure of three significant investors from the Byju board, including Prosus and Peak XV Partners. The inquiry discovered that Byju's increasing losses were caused by a shift in the funding environment, as well as inadequate corporate governance and compliance procedures.
