India’s Supreme Court has overturned a tribunal order that permitted Byju’s to settle its debts with a domestic creditor, pushing the embattled online education platform closer to insolvency. The ruling deals a blow to Byju’s founder, Byju Raveendran, and places control of the company in the hands of a court-appointed bankruptcy professional.
The decision is a victory for U.S.-based creditor Glas Trust Company, which had opposed Byju’s settlement with the Board of Control for Cricket in India (BCCI). Glas Trust, seeking to recover its $1.2 billion debt from Byju’s, now finds itself back in a stronger position as the case returns to bankruptcy court.
Byju’s, once valued at $22 billion, rose to prominence as a leading online tutoring service, particularly during the COVID-19 pandemic. The company’s rapid growth and international expansion turned Raveendran into a billionaire, but as the pandemic eased and schools reopened, Byju’s struggled financially, facing mounting legal challenges both in India and the U.S.
The Supreme Court’s ruling is based on the finding that the appeals tribunal failed to follow proper legal procedures when approving the settlement between Byju’s and BCCI. This sends Byju’s back into India’s insolvency process, which could ultimately lead to the liquidation of the company if no buyer is found.
Under India’s insolvency laws, a bankruptcy professional manages the company while a creditors’ panel is formed to review claims and potentially seek bids from buyers. If no suitable buyer emerges, the company could be forced into liquidation.
Byju’s, once a symbol of India’s flourishing tech industry, joins other prominent firms such as Paytm in facing significant financial and legal hurdles. Paytm, for example, has been grappling with the fallout from the suspension of a key division by India’s central bank.
In an earlier ruling in August, an Indian appeals court allowed Byju’s to settle its $18.9 million debt with BCCI, but the latest Supreme Court decision nullifies that outcome. Glas Trust had argued in U.S. court that Riju Ravindran, the founder’s brother, was wrongly prioritizing BCCI over U.S. creditors. Ravindran has reportedly been liquidating his own assets to settle the cricket board debt, though Byju’s lawyers maintain this is not U.S. lenders’ money.
