The National Company Law Tribunal (NCLT) issued a major decision that could change the course of Byju’s bankruptcy proceedings: it ordered disciplinary action against the resolution professional (RP) who was working on the case. Glas Trust and Aditya Birla Finance were reinstated in the Committee of Creditors (CoC) after the tribunal found the RP guilty of wrongdoing and misleading conduct. This ruling could alter the direction of Byju’s financial restructuring and represents a significant win for the creditors.
Credits: Money Control
The Tribunal’s Verdict: Reinstating Key Creditors
The NCLT’s order came after Glas Trust and Aditya Birla Finance challenged their exclusion from the CoC, arguing that their removal was unjustified. The tribunal agreed, declaring the RP’s decision invalid and reinstating both creditors into the committee.
The CoC, which was originally constituted on August 21, 2024, included Glas Trust and Aditya Birla Finance. However, on August 31, the RP reconstituted the CoC and removed these creditors without a clear justification. With the latest ruling, the NCLT has directed that the CoC be reverted to its original composition, ensuring that Glas Trust and Aditya Birla Finance have a say in Byju’s restructuring process.
Disciplinary Action Against the Resolution Professional
One of the most critical aspects of the ruling is the tribunal’s decision to take action against the RP, Pankaj Srivastava. The NCLT directed the Insolvency and Bankruptcy Board of India (IBBI) to initiate a disciplinary inquiry, citing misconduct and an attempt to mislead the tribunal.
“The conduct of the IRP in the present case has been filed with the intent to mislead the tribunal … The above conduct on part of IRP needs to be dealt with by way of disciplinary proceedings by the IBBI,” the tribunal stated, as reported by Bar & Bench.
This decision underscores the tribunal’s commitment to ensuring fair and transparent insolvency proceedings, preventing RPs from making arbitrary decisions that could harm stakeholders.
Invalidation of Resolutions Passed by the Reconstituted CoC
Another major impact of the ruling is the nullification of all resolutions passed by the CoC that was formed after September 3, 2024. This means that any decisions made by the RP and the reconstituted CoC during this period are now void, further reinforcing the tribunal’s stance against unfair creditor exclusion.
The tribunal has also instructed the CoC to convene a meeting to recommend a new resolution professional, effectively replacing Srivastava. This development will likely bring more scrutiny to how insolvency professionals manage high-profile cases like Byju’s.
Glas Trust’s Fight for Creditor Rights
The reinstatement of Glas Trust is particularly significant, given its ongoing battle to recover a $1.35 billion loan. The RP had earlier removed Glas Trust, arguing that it did not meet the required threshold of representing at least 51% of the lender. However, Glas Trust challenged this move, accusing the RP of backdating documents and holding secret meetings to manipulate the CoC’s composition.
On September 4, 2024, Glas Trust and other lenders released a statement accusing the RP of fraudulent actions. They argued that their removal from the CoC severely weakened their position in securing repayments and penalties. With the latest ruling, Glas Trust has regained its voice in the restructuring process, significantly improving its chances of recovering its dues.
Credits: Times of India
The BCCI Settlement: A Pending Decision
The tribunal is yet to rule on an application by the Board of Control for Cricket in India (BCCI), which is seeking to settle its dispute with Byju’s. The dispute stems from the Supreme Court’s decision on August 14, 2024, which overturned the National Company Law Appellate Tribunal’s (NCLAT) approval of a ₹158 crore settlement between Byju’s and BCCI. This ruling halted Byju’s bankruptcy proceedings and led to renewed legal battles.
Glas Trust had opposed the earlier settlement, arguing that financial creditors should have priority over operational creditors like BCCI when it comes to repayments. The Supreme Court’s order sent the matter back to the NCLT for a fresh review. Now, with Glas Trust back in the CoC, the tribunal’s decision on the BCCI settlement could further impact Byju’s financial future.
