The case of GLAS Trust Company LLC v. Byju Raveendran and Others (2024) centres on financial disputes involving Byju’s, a prominent Indian ed-tech company, and its international lenders.
Brief Facts of the Case
- Loan Agreement: Byju’s secured a $1.2 billion term loan, with GLAS Trust Company LLC acting as the administrative and collateral agent on behalf of the lenders.
- Alleged Defaults: The lenders, represented by GLAS Trust, alleged that Byju’s defaulted on its debt servicing obligations under the loan agreement.
- Settlement with BCCI: Byju’s settled a $19 million payment dispute with the Board of Control for Cricket in India (BCCI). GLAS Trust contended that the funds used for this settlement were inappropriately diverted from amounts owed to the lenders.
- Insolvency Proceedings: In response to the alleged defaults, insolvency proceedings were initiated against Byju’s. The National Company Law Appellate Tribunal (NCLAT) approved a settlement between Byju’s and BCCI, leading to the closure of these proceedings.
- Appeal to the Supreme Court: GLAS Trust challenged the NCLAT’s decision, arguing that the settlement was improper and that the insolvency proceedings should continue. The Supreme Court of India agreed to hear the appeal, reinstating the insolvency process against Byju’s.
Final Judgment
In October 2024, the Supreme Court of India delivered its judgment, setting aside the NCLAT’s decision to close the insolvency proceedings. The Court emphasized the importance of following the prescribed procedures under the Insolvency and Bankruptcy Code (IBC) and held that the NCLAT had overstepped its inherent powers by approving the settlement without adhering to these procedures.
The Supreme Court’s ruling reinstated the insolvency proceedings against Byju’s, underscoring the necessity for strict compliance with the IBC’s provisions and reaffirming the collective nature of insolvency processes, where the interests of all creditors must be considered.