Byju Raveendran Challenges NCLT's Ruling on Creditors' Inclusion

The battle for control over embattled edtech giant Byju’s has taken another dramatic turn. Founder and CEO Byju Raveendran has now challenged the National Company Law Tribunal’s (NCLT) recent order that reinstates two of its major creditors—Glas Trust and Aditya Birla Finance—into the Committee of Creditors (CoC) of its parent company, Think & Learn. The move comes as part of an escalating legal tussle that could have far-reaching consequences for the governance and financial stability of one of India's most high-profile startups.

Raveendran’s appeal, filed with the National Company Law Appellate Tribunal (NCLAT), argues that the inclusion of these creditors and the restructuring of the CoC were based on "fundamentally flawed" premises. The challenge, led by senior advocate S Guru Krishna Kumar on behalf of Raveendran, raises crucial questions about the tribunal's selective acceptance of past decisions while disregarding subsequent developments in Byju’s corporate restructuring.

How Did We Get Here?

The origins of this legal wrangling date back to August 2023, when the CoC for Think & Learn was initially formed on August 21. This committee included major financial institutions such as Aditya Birla Finance and Glas Trust, which represents Byju’s U.S. lenders. However, in a surprising turn of events, these creditors were later removed when interim resolution professional (IRP) Pankaj Srivastava reorganized the committee on August 31. Srivastava defended his decision, arguing that the CoC had been formed provisionally and that creditor claims were still under verification.

This move did not sit well with the creditors. In January, Glas Trust and Aditya Birla Finance approached the NCLT, seeking reinstatement into the CoC, arguing that their removal was unwarranted and arbitrary. The tribunal sided with the creditors, leading to their reinstatement—a decision that Raveendran is now challenging at the appellate level.

The Legal Arguments: A Clash of Perspectives

The heart of this dispute lies in the interpretation of corporate insolvency laws and the role of an interim resolution professional in restructuring the CoC.

Representing Byju Raveendran, senior advocate S Guru Krishna Kumar pointed out inconsistencies in the NCLT’s ruling. He questioned why the tribunal acknowledged lapses in Srivastava’s conduct yet upheld the CoC constituted on August 21 while disregarding the later changes made on August 31.

“Some kind of line is drawn by the adjudicating authority, as if to say that whatever he did on August 21 is accepted, but everything else is disregarded,” Kumar argued before the NCLAT, highlighting the selective acceptance of decisions made during the insolvency proceedings.

On the other hand, Glas Trust’s advocate Srinivasa Raghavan refuted this argument, maintaining that the interim resolution professional had no authority to alter the CoC once it had been formed. According to Raghavan, once the CoC is constituted, it cannot be changed without the explicit approval of the NCLT. Aditya Birla Finance’s legal counsel, Pramod Nair, further reinforced this argument, stating that while the IRP can revise the amount owed, they cannot unilaterally alter the financial status of a creditor once determined.

What’s at Stake for Byju’s?

This legal battle is not just about committee formations and insolvency proceedings—it could have significant ramifications for Byju’s future. The inclusion or exclusion of creditors from the CoC can influence critical decisions regarding debt restructuring, fundraising, and the company’s broader financial roadmap. If the appellate tribunal upholds the NCLT’s ruling, the creditors may gain greater influence over Byju’s ongoing restructuring process, potentially affecting Raveendran’s control over the company.

Moreover, Byju’s has been navigating turbulent waters over the past year, dealing with mounting financial distress, investor scrutiny, and regulatory challenges. With a valuation once soaring above $22 billion, the company has struggled to maintain its standing amid layoffs, missed loan repayments, and leadership shake-ups. The outcome of this legal dispute could determine the next phase of Byju’s corporate saga, shaping its ability to regain stability and investor confidence.

The Verdict Awaits

On February 7, a two-member bench comprising Justice Rakesh Kumar Jain and Jatindranath Swain directed the NCLT to uphold its decision to reinstate Glas Trust and Aditya Birla Finance into Byju’s CoC. However, with Raveendran’s latest challenge at the NCLAT, the final decision remains uncertain.

As Byju’s continues to grapple with its financial and legal troubles, the upcoming verdict could be a turning point—either reinforcing Raveendran’s control or shifting power dynamics within the edtech giant. The case underscores the complexities of corporate insolvency and the high-stakes nature of business battles in India’s rapidly evolving startup ecosystem.

For now, all eyes are on the appellate tribunal, as stakeholders await a resolution to one of the most closely watched legal confrontations in India’s startup history.