New Delhi: The Bengaluru bench of the National Company Law Tribunal (NCLT) Tuesday allowed the Board of Control for Cricket in India’s insolvency plea against ed-tech firm Byju’s parent company Think and Learn Pvt Ltd for defaulting on Rs 158.9 crore.
BCCI moved against Think and Learn after their Indian cricket team’s jersey sponsorship deal fell through in 2023, but Think and Learn opposed the insolvency proceedings on various grounds, including that the deal involved the transfer of certain rights only.
On Tuesday, NCLT’s Bengaluru bench, however, said that it was indisputable that Think and Learn availed BCCI’s services through sponsorship rights and was required to pay fees to the BCCI.
Allowing the corporate insolvency resolution process (CIRP), the NCLT appointed Pankaj Srivastava as interim resolution professional for running Byju’s parent company until the formation of a committee of creditors.
With the board of directors facing suspension under Section 17 of the Insolvency and Bankruptcy Code Act, 2016, Srivastava will have control of the company’s management.
However, the company’s assets, for now, will remain protected under moratorium, preventing any transfer or sale of its assets and institution of any new suits against it.
This case has thrown light on several bankruptcy cases against the company in India and abroad. Currently, the company is facing huge financial losses, with its valuation falling below Rs 8,300 crore.
The NCLT arrived at its judgment, saying that the BCCI provided Think and Learn the exclusive right to marketing-related services by way of the exclusive right to become the team sponsor of the Indian cricket team. That included the right to display trademarks and brand names on specified portions of the team kit for the Indian cricket teams, it said.
Byju’s also had permission to advertise with video footage from the cricket series, promotional events, and the television network’s engagement with the cricket players, the NCLT bench said.
BCCI had granted Byju’s permission to use its intellectual property as logos and other official trademarks as marketing materials, as well.
“As consideration, the corporate debtor [Think and Learn Pvt Ltd] was required to pay a fee to the operational creditor. The corporate debtor was the sponsor of the Indian cricket team, as per the above arrangements, and availed the services for a period up until 31.03.2023,” the NCLT noted.
The NCLT said that Think and Learn defaulted on at least 12 invoices raised by BCCI. The first default of Rs 1,35,53,400 was on 21 August 2022, and it continued to happen. The company via emails would request more time after defaulting on payments.
“It is contented that these emails were the admission of the debt owed by the corporate debtor, and the default had occurred since there was a request for extension of the time repeatedly,” the NCLT said.
“There is no dispute, in so far as the facts of this case are concerned, that the amount raised by the invoices are due and payable, constituting ‘default’ under Section 3(12) of the IBC,” it added.
Moreover, the NCLT highlighted that due to the company’s inability to benefit from the deal, it asked the BCCI to extend the agreement till 2025.
Then, the parties began negotiating the terms of a new agreement and how Think and Learn should pay the right fees. There were “multiple rounds of discussions, in which the respondents (Think and Learn) proposed extensions and various deals several times, all of which were denied by the operational creditor (BCCI)”, the NCLT said.
Think and Learn had three key branding partnerships, including the one with BCCI. The others were with the International Cricket Council (ICC) and the Federation Internationale de Football Association (FIFA). All were up for renewal in 2023 but were not processed.
(Edited by Madhurita Goswami)
Also read: Why BCCI filed insolvency plea against Byju’s parent company & what happens to ed-tech firm now