Relief For Byjus In Insolvency Proceedings
On Tuesday, August 20, the Supreme Court of India declined to issue an interim order. The order was to halt the formation of a Committee of Creditors (CoC) for ed-tech giant Byju’s. This order is amid ongoing insolvency proceedings. The request was made by Senior Advocate Dr. Abhishek Manu Singhvi. He is representing Byju’s, during a mention before Chief Justice of India DY Chandrachud.
Observation
Singhvi expressed concerns that a prior Supreme Court order. This had frozen the settlement between Byju’s and the Board of Control for Cricket in India (BCCI). It could inadvertently revive the insolvency proceedings before the National Company Law Tribunal (NCLT). He requested that the CoC not be constituted before the matter is heard on August 23. Thus, arguing that such a move could complicate the case further.
If the court stays the order, it will revive the Corporate Insolvency Resolution Process (CIRP). Normally, the process concludes with the formation of the Committee of Creditors (CoC). If the CoC forms, I will need to file an application under Section 12A of the Insolvency and Bankruptcy Code (IBC). We simply ask that the Resolution Professional (RP) refrain from forming the CoC before Friday,” Singhvi explained.
Supporting Singhvi’s plea, Solicitor General of India Tushar Mehta, represented the BCCI. He warned that forming the CoC could render the matter moot without a proper hearing. “If the CoC is constituted in the next two days, it could make the case infructuous,” Singhvi added.
While Chief Justice Chandrachud acknowledged the concerns and agreed to hear the case on Thursday. He refrained from passing an immediate order. “We will hear the matter,” the CJI remarked.
In response, Singhvi concluded, “Very well, my lord. Our concerns are on record. We will see if they proceed to form the CoC in the next two days.”
Conclusion
This development follows the Supreme Court’s order on August 14, which stayed the National Company Law Appellate Tribunal (NCLAT) approval of a settlement between Byju’s and the BCCI over an outstanding amount of Rs 158 crores. The stay was issued after a US-based lender, Glas Trust Company LLC, challenged the settlement.
