Supreme Court’s Decision on Byju’s Insolvency Case: What Next?

Supreme Court Overturns NCLAT Decision: The Supreme Court has set aside the NCLAT’s ruling that halted insolvency proceedings against Byju’s, citing procedural overreach and emphasizing the need to follow Insolvency and Bankruptcy Code (IBC) protocols.

Implications for Byju’s Financial Health: This decision marks a significant setback for Byju’s, as it must now navigate the insolvency process under strict supervision, potentially impacting its financial stability and operational control.

Role of Glas Trust Company LLC: The U.S.-based creditor, Glas Trust Company LLC, played a crucial role in challenging the NCLAT decision, arguing that as a major financial creditor, it should have priority in repayments.

Impact on BCCI Settlement: The Supreme Court’s ruling affects the ₹158 crore settlement between Byju’s and the BCCI, directing that the amount be deposited into an escrow account managed by the Committee of Creditors (CoC).

Future Adjudication by NCLT: The case has been remanded to the National Company Law Tribunal (NCLT) for fresh adjudication, with clear instructions that any settlement must be processed through the Interim Resolution Professional (IRP).

Rebuke of NCLAT’s Overreach: The Supreme Court criticized the NCLAT for misusing its inherent powers to halt the insolvency proceedings, underscoring that only the IRP has the authority to file withdrawal requests once an insolvency application is admitted.  

Next Steps for Byju’s: Byju’s must now comply with the IBC procedures, which include working closely with the IRP and CoC to resolve its financial obligations. This process will determine the company’s future and its ability to recover from its current financial woes