Byju's insolvency: Supreme Court refuses to stay Committee of Creditors meetings

The Supreme Court on Thursday declined to defer or order any stay on the operations of a Committee of Creditors (CoC) formed recently to oversee the corporate insolvency resolution process (CIRP) initiated against ed-tech firm Byju's [Glas Trust Company LLC v. Byju Raveendran and ors]..A Bench of Chief Justice of India (CJI) DY Chandrachud with Justices JB Pardiwala and Manoj Misra indicated it would not pass any such stay order to restrain CoC proceedings without first examining the matter on merits. "If we dismiss the appeal then everything goes. If we dismiss their appeal, they cannot say, now go under section 12A. We need to hear on merits," the CJI said before adjourning the matter till Tuesday, August 27.The Court was hearing an appeal filed by a creditor challenging a decision to close insolvency proceedings against Think & Learn, the parent company of Byju's. The Court had on August 14, stayed the National Company Law Appellate Tribunal (NCLAT) decision in the matter and revived the insolvency process against Byju's. .The insolvency proceedings against Byju's was first initiated in June this year by the National Company Law Tribunal (NCLT), Bengaluru CIRP on a plea by the BCCI.The BCCI had moved the plea after Byju's defaulted on the payment of around ₹158 crores connected to Indian cricket team jersey sponsorship deals.The June order was challenged before the NCLAT Chennai, which halted the insolvency process in July after the BCCI informed that it had arrived at a settlement with Byju's.Byju's founder Byju Raveendran told the NCLAT that the due amount would be paid to BCCI by his brother Riju (the largest shareholder of Byju's) from his personal account.At the time, Glas Trust had raised concerns that stolen money (referring to a sum of $533 million) that was due from Byju's to financial creditors may be used to repay the BCCI.After the NCLAT overruled Glas Trust's objections and halted the insolvency process against Byju's, the financial creditor moved the Supreme Court for relief.The top court revived the insolvency proceedings on August 14, when it stayed the NCLAT order..The focus of the brief follow-up hearing today was a CoC that Byju's claimed had been formed yesterday. "Just 12 hours ago, the committee of creditors is constituted wherein the 98 percent is by the US based company. The email is marked to IRP Mr Dinkar who is the IRP in his section 7 application," informed Dr AM Singhvi for Byju's.Senior Advocate Shyam Divan, representing US-based creditor Glas Trust, which had filed the appeal before the top court, said"I have not framed any COC. This is incorrect. This Mr Dinkar is the IRP in the application by BCCI.".Notably, the NCLAT had earlier closed insolvency proceedings against Byju's after it accepted a settlement between the ed-tech firm and the Board of Control for Cricket in India (BCCI).Before the Supreme Court, the BCCI's counsel too urged the Court to stay the CoC's operations. "Let meeting of COC be deferred or stayed.. How can this 98 percent decide anything..?" argued Solicitor General Tushar Mehta, on behalf of the BCCI. He reiterated that it would amount to allowing the appeal if the CoC process (and by extension the insolvency proceedings) are not stayed. "Equities must be balanced," he urged. The Court, however, maintained that it would not pass any stay order against the CoC for now and that a decision would be taken after hearing the matter on merits. .Senior Advocate Dr. AM Singhvi and advocates Zulfiquar Memon, Waseem Pangarkar and Nadiya Sarguroh from MZM Legal LLP represented Byju Raveendran.Solicitor General Tushar Mehta with advocate Kanu Agrawal, briefed by Argus Partners, appeared for the BCCI.Senior Advocate Shyam Divan along with advocates Prateek Kumar, Raveena Rai, Smriti Nair, Nishant Sharma and Anshula Laroiya from law firm Khaitan & Co, appeared for Glas Trust LLC.