Byju's Insolvency: Supreme Court orders IRP to maintain status quo, halts CoC meeting

The Supreme Court on Thursday reserved its verdict in the appeal filed by US-based financial creditor Glas Trust challenging the National Company Law Appellate Tribunal's (NCLAT) decision to halt insolvency proceedings initiated against Think & Learn, the parent company of 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 also ordered the interim resolution professional to maintain status quo for the time being and not hold any meeting of committee of creditors (CoC). "Until the judgment is pronounced, the interim resolution professional shall maintain status quo and shall not hold any meeting of the committee of creditors," the Court directed..The Supreme Court had on Wednesday expressed doubts over whether the NCLAT had applied its mind while deciding to close insolvency proceedings against ed-tech firm Byju's.It had indicated that it is inclined to send the matter back to the NCLAT to take a fresh decision, and expressed concern over whether creditors of Byju's - other than the Board of Cricket Control for India (BCCI) - would be left in the lurch if the insolvency process were to be halted..The insolvency resolution proceedings against Byju's were initiated in June by the National Company Law Tribunal (NCLT) in Bengaluru on a plea by the BCCI. The BCCI claimed that Byju's owed it ₹158 crore as part of cricket jersey sponsorship deals.However, BCCI later submitted that it had reached a settlement with Byju's, whereby Riju Raveeendran, the brother of Byju's founder Byju Raveendran, would clear these dues out of his personal funds.Recording this settlement, the NCLAT at Chennai had closed the insolvency proceedings against Byju's..This was opposed by Glas Trust, which had raised concerns that stolen money that was due to financial creditors may be used by Byju's to repay the BCCI.On August 14, the top court stayed the NCLAT decision and revived the insolvency process against Byju's.On August 22, it declined to defer or order any stay on the operations of a Committee of Creditors (CoC) formed to oversee the corporate insolvency resolution process (CIRP).During the hearing today, Solicitor General Tushar Mehta, appearing for BCCI, said that there are some provisions in the Insolvency and Bankruptcy Code which incentivises the settlement between corporate debtor and the other so that all debts do not become alive at one stroke and the company goes.He said that if this appeal is allowed, then Glas trust will not have to show how much money is due as of now. "They can be on our shoulder and be counted as a financial creditor. That is the issue which is arising," he submitted.Senior Advocate Kapil Sibal, appearing for Glas Trust, objected to the CoC meeting proposed to be held today."Please look at the conduct of the corporate debtor. Insolvency professional regulations 216 speaks about duty of the code of conduct. On September 3, I am removed. The IRP is holding a meeting today at 4 pm. What is the time limit under 22(1) and then BCCI comes and says makes me a party and then he said it cannot proceed till BCCI is a party and now a meeting at 4 pm! There must be complete status quo on this. The CoC meeting cannot be held at 4 pm today," he said..Senior Advocates Shyam Divan and Kapil Sibal along with advocates Prateek Kumar, Raveena Rai, Smriti Nair, Nishant Sharma and Anshula Laroiya from law firm Khaitan & Co appeared for Glas Trust..Senior Advocates AM Singhvi and Neeraj Kishan Kaul along with advocates Zulfiquar Memon, Waseem Pangarkar and Nadiya Sarguroh from MZM Legal LLP appeared for Byju's..SG Mehta was assisted by advocate Kanu Agrawal and briefed by Argus Partners, in his appearance for the BCCI..[Read order]