NCLT questions Byju's IRP about CoC Reconstitution And Aakash Institute’s Board Meeting

NCLT questions Byju's IRP about CoC reconstitution and Aakash Institute’s board meeting

The Bengaluru bench of the National Company Law Tribunal (NCLT) has questioned Byju's insolvency resolution professional (IRP) Pankaj Srivastava’s involvement in the reconstitution of the committee of creditors (CoC) and the board meeting of Aakash, Institute, the ed-tech company’s subsidiary. The bench questioned why the IRP removed Aditya Birla and Glas Trust, which represented a group of US entities that lent $1.2 billion to Byju's, from the CoC. It said, "One interlocutory Application (IA) was filed to inform us about the initial constitution of the CoC, which is still not listed, as the IRP refused to rectify the objections we raised (in August).”

Questioned the company filing the copy (CoC intimation) on 24 August, and raising the objections on 28 August, the court asked, “What have you done since then?" It directed the IRP to address the objections by Thursday.

However, Aditya Sondhi, the counsel representing the IRP argued that the CoC was formed on a provisional basis owing to the pressure to establish the CoC after the Supreme Court order. While highlighting that the verification had not been done, the counsel added, "The same was communicated to all financial creditors, informing that we are provisionally admitting their claims for forming the CoC and will continue to review their documents.”

Sodhi added that Glas Trust's claim was contested because of a pending New York court case regarding the term loan B.

The bench then questioned whether the IRP had the authority to reconstitute the CoC based on pending matters. "It is only a disqualification notice, yet to be decided by the New York court. How can the IRP decide on that?

To this, Sodhi claimed that if a creditor's claim amount was uncertain due to contingencies or other factors, the IRP or the RP had the power to revise it, and the reconstitution of the CoC follows because of that revision.

Meanwhile, Glas Trust and Aditya Birla argued that the IRP could revise the amount but not the committee’s status. Representing Glas Trust, senior advocate Srinivasa Raghavan stated, "Their plan is very clear. They want to avoid the CoC because it must be formed according to the original constitution. It was reconstituted illegally by excluding us. They know that if a withdrawal application is to be filed, it must go before the CoC, which should include Glas Trust, Aditya Birla, and others. Now, they are attempting to move the application without the CoC by making an application that is not maintainable.”

Earlier, it was reported that Glas Trust sought rejection of the application of the Board of Control for Cricket in India (BCCI) to withdraw its insolvency petition against the cash-strapped Byju’s. Sondhi had argued that the cricket board filed the withdrawal application before the CoC was formed. Hence, it should be considered. However, Raghavan stated that even if the CoC was not constituted, the application was never placed before the tribunal. Regarding Aakash Institute, the bench sought clarification on who represented Byju's parent company Think & Learn at Aakash's board meeting in October.

The IRP informed that in July, a communication was sent to Aakash and Byju's, revoking all previous authorizations and giving the IRP the sole authority to represent. However, the minutes of the meeting showed Byju's founder Byju Raveendran attended the meeting via video call, therefore, he should be questioned. Since Byju's is undergoing the insolvency, Raveendran is prohibited from attending the meeting.

Thus, the NCLT remarked, "It is surprising that the minutes of a meeting held on 21 October are still not available to the IRP, even after a month, despite him being I -charge of the company. It clearly shows that the IRP is not functioning properly. You also allowed the extraordinary general meeting (EGM) to proceed.”