LI Network
Published on: December 14, 2023 at 08:30 IST
The National Company Law Tribunal (NCLT) has served notice to BYJU in response to the Board of Control for Cricket in India’s (BCCI) plea to initiate insolvency proceedings against BYJU.
The BCCI alleges a default of Rs 158 crore under a 2019 sponsorship agreement for the Indian cricket team jerseys. Legal experts emphasize the seriousness of insolvency admission and recommend a resolution between BYJU and BCCI to avert severe consequences.
The BCCI filed the plea under Section 9 of the Insolvency and Bankruptcy Code 2016, focusing on operational creditor rights. Shashank Agarwal, Advocate at Delhi HC, notes that BYJU’s primary defense is establishing a pre-existing dispute, crucial for resisting the action under IBC. Without demonstrating this dispute, BYJU may find it challenging to defend against the insolvency proceedings.
The case, initiated on September 8, 2023, and registered on November 15, raises concerns about the future of commercial partnerships in sports. Sonal Alagh, Partner at Alagh & Kapoor Law Offices, anticipates a re-evaluation of such partnerships, emphasizing stricter financial scrutiny and legal compliance.
Tabrez Malawat, Partner at The Guild, advises BYJU to settle the dispute with BCCI, highlighting the serious repercussions of insolvency admission. If BYJU fails to establish a pre-existing dispute, insolvency resolution becomes a plausible scenario, risking management control loss and equity consequences.
The NCLT granted BYJU two weeks to respond and an additional week for BCCI to file a rejoinder. The case is scheduled for the next hearing on December 22, with a potential for settlement between the parties before or after admission with CoC’s approval.