SUMMARY
Glas represents over 100 lenders who had lent money to the US-based entity of BYJU’S, which is currently struggling with bankruptcy hearings at a court in Delaware
The Indian entity of BYJU’S had stood a guarantee to the loan worth $1.2 Bn for the US-based entity of the edtech company
Advocate Holla argued that when the lenders sought back the money, the Indian entity did not respond, which provoked the legal action
Trouble continues to mount for BYJU’S as now the National Company Law Tribunal (NCLT) has issued a notice to the embattled edtech giant in response to a plea filed by US-based non-bank loan agency Glas Trust Company LLC to initiate the insolvency resolution procedure.
The tribunal has directed BYJU’S to file its response to the plea and listed the case for hearing in April.
This comes just a day after an NCLT bench on February 27 (Tuesday) reserved its judgement on a petition filed by a group of four investors, including Prosus, Peak XV Partners, General Atlantic and Sofina, against BYJU’S CEO and other promoters. The investor group had moved its petition under Sections 241 and 242 of the Companies Act.
The bench asked all the parties to file written submissions within the next three days. It also issued notices to the Registrar of Companies (ROC) and the Ministry of Corporate Affairs.
Glas Trust represents over 100 lenders who had lent money to the US-based entity of BYJU’S, which is currently struggling with bankruptcy hearings at a court in Delaware.
According to senior advocate Uday Holla, appearing for Glas trust, the Indian entity of BYJU’S had stood a guarantee to the loan worth $1.2 Bn (about INR 8K Cr), Moneycontrol reported.
He stated that the lenders have authorised Glas trust to recover the loan. He further argued that when the lenders sought back the money, the Indian entity did not respond. To NCLT, he said that the non-responsiveness provoked them to take it up legally against BYJU’S.
This is the fourth insolvency case against the company in a period of less than six months.
It is pertinent to note that BYJU’S also moved the Karnataka High Court under Section 9 of the Arbitration Act against the EGM called by the investors on February 23. The company got a temporary relief from the court, which ordered that the decisions taken in the EGM would not come into effect at least till March 13, the next date of hearing in the case.
The investors of BYJU’S passed seven resolutions during the EGM, including those calling for the reconstitution of the company’s board and ouster of CEO Byju Raveendran, along with the removal of his wife Divya Gokulnath and brother Riju Raveendran from their respective management roles
Additionally, concerns were also raised about BYJU’S loss of control over subsidiaries such as Aakash, failure to hire the right chief financial officer, and deliberate default in sharing financial information with shareholders, among others.
However, in response to the plea, the bench asked all the parties to file written submissions within three days.
The edtech company was also dragged to the NCLT by the Board of Control for Cricket in India (BCCI) on grounds of dispute related to sponsorship rights of the Indian cricket team’s jerseys. Later, BYJU’S sought the intervention of an arbitrator to address the matter.
