NCLT Challenges Byju's RP: What's at Stake in the CoC Reconstitution?

Pankaj Srivastava, Byju's insolvency resolution professional (RP), was questioned by the National Company Law Tribunal's (NCLT) Bengaluru bench on Wednesday regarding his participation in the board meeting of Byju's subsidiary Aakash Institute as well as the formation of the company's committee of creditors (CoC). Simply put, Pankaj Srivastava, Byju's insolvency resolution professional (RP), is being questioned by the NCLT Bengaluru bench about the recent Aakash Institute board meeting and the formation of the committee of creditors (CoC). The RP's attorney clarified that the CoC was created temporarily in response to pressure from a Supreme Court order, meaning they needed to move swiftly to meet legal obligations.

What Does This Mean for Byju's?

• Byju's is currently going through an insolvency resolution procedure. This indicates that they are attempting to control their debts and figure out how to settle them with creditors while continuing to run the company.

• A council of creditors known as the CoC will decide how Byju's debts should be handled. According to the NCLT's inquiries, there might be questions regarding the committee's formation and adherence to the correct protocols.

• The Supreme Court's pressure is mentioned, which suggests that Byju's had to follow specific legal deadlines and responsibilities during this process, which would have hurried the CoC's establishment.

Byju's: The bench questioned why the RP had removed Glas Trust.

The bench questioned why the RP had removed Glas Trust, which represents a group of US entities that lent $1.2 billion to Byju and Aditya Birla, from the CoC. "One IA (interlocutory application) was filed to inform us about the initial constitution of the CoC, and that is still not listed because the RP has refused to rectify the objections we raised (in August)," the bench said. "Objections were made on 28 August after you filed this copy (CoC intimation) on 24 August. Since 28 August, what have you been up to? In addition to asking, the bench instructed the RP to respond to the CoC objections by Thursday. The RP's attorney contended that the CoC was created provisionally in response to demands to do so following the Supreme Court's ruling.

While emphasizing that the verification was not completed, the attorney stated, "The same was communicated to all the financial creditors, informing them that we are provisionally admitting their claims to form the CoC and that we will continue to review their documents." According to Aditya Sondhi, who represented the RP, Glas Trust's claim was opposed because of an ongoing New York court case about the term loan B. The bench questioned whether the RP could reconstitute the CoC in light of outstanding issues. It is merely a notice of disqualification that the New York court still needs to determine. How can the RP make such a determination? The bench spoke.

According to Sondhi, the IRP or RP has the authority to amend a creditor's claim amount if it is unclear because of unforeseen circumstances or other considerations, and the CoC will then be reconstituted as a result of the revision. Aditya Birla and Glas Trust contended that the RP could change the sum but not the committee's standing.

Glas Trust statement for Byju's

"They have an obvious plan. Since the original constitution must establish the CoC, they wish to avoid it. By leaving us out, it has been unlawfully reconstituted. They know that the CoC, including Glas, Aditya Birla, and others, must hear a withdrawal application before it can be submitted. Senior counsel Srinivasa Raghavan, speaking on behalf of Glas Trust, stated, "They are now trying to move the application without the CoC by making an application that is not maintainable at all."

Now, What Will Take Place with Byju's?

• Regarding the creation of the CoC and consequences for the board meeting of Aakash Institute, the NCLT could need more information from the RP. This may impact the course of the insolvency process.

• The court may review the validity and compliance of all measures taken thus far in the insolvency procedures concerning the law.

• Until a resolution plan is approved or the NCLT makes additional decisions, Byju's will continue to operate under the RP's supervision while preserving the status quo.

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