In a crucial move, the Karnataka High Court has halted the Committee of Creditors (CoC) of Think and Learn Pvt Ltd, the parent company of educational tech giant Byju’s, from conducting any meetings or making decisions concerning the company’s insolvency process. This decision awaits further proceedings at the National Company Law Tribunal (NCLT), which has been tasked with resolving applications concerning the replacement of the company’s Resolution Professional (RP).
The order, issued on October 25 by Justice Hemant Chandangoudar, responded to a petition from Glas Trust Company which expressed concerns about the current RP’s handling of the insolvency process. This judicial intervention effectively pauses the CoC’s decision-making capabilities, initially prompted by the NCLT’s temporary adjournment.
The High Court’s directive ensures no CoC meetings will take place until the NCLT addresses all pending applications, including those aiming to replace the current RP, following its session resumption on November 4. The court has also permitted the RP to seek NCLT approval for essential financial disbursements needed for ongoing operations, such as employee salaries and statutory dues, pending further court decisions.
The backdrop of this legal intervention includes significant complaints from creditors like Aditya Birla Finance and Glas Trust Company, who on November 4, formally requested the replacement of the RP. They argue that the current RP’s actions have compromised the transparency and fairness of the insolvency process, particularly by classifying only one creditor as a financial creditor, thereby granting them unilateral voting rights in the CoC.
This issue is crucial because financial creditors have significant influence over the Corporate Insolvency Resolution Process (CIRP), possessing voting rights that can determine the outcome of the insolvency proceedings, while operational creditors lack such rights.
The situation has further complexities following a recent Supreme Court decision on October 23, which overturned a previous National Company Law Appellate Tribunal (NCLAT) ruling that had halted Byju’s insolvency proceedings based on a settlement agreement involving Byju’s founder, Byju Raveendran, and the Board of Control for Cricket in India (BCCI).
With the High Court’s recent ruling, all parties involved are now looking towards the NCLT’s upcoming decisions, which are expected to significantly impact the governance of Think and Learn’s insolvency resolution process.
