BYJU’S Insolvency: IRP ousts Glas Trust from CoC, lenders accuse of claim rejection plot

In the BYJU’S insolvency case, interim resolution professional (IRP) Pankaj Srivastava has removed Glas Trust, a US-based non-bank loan agency representing lenders with claims exceeding $1.35 billion, from the Committee of Creditors (CoC), as per a statement.

NCLT-appointed Srivastava notified Glas Trust of its removal from the CoC via an email on September 3, which included a letter dated September 1, according to the statement by the US-based lenders.

GLAS Trust Company LLC serves as administrative agent and collateral agent under the approximately $1.5 billion term loan guaranteed by Think and Learn Private Limited (TLPL), the parent company of BYJU’S.

Srivastava’s letter suggests that Glas Trust may not have the proper authority to represent the lenders claiming over a billion dollars from the edtech company. He has asked Glas Trust to clarify its position and provide supporting documents.

“Pankaj Srivastava’s actions are unprecedented and entirely illegitimate as no interim resolution professional in the history of the Insolvency and Bankruptcy Code of India has ever attempted to unlawfully strip financial creditors of claims of this magnitude amounting to more than US$1.35 billion without any legitimate reason and in doing so securing his appointment as the permanent resolution professional,” the lenders noted in a statement.

Glas Trust has petitioned the Bengaluru bench of the National Company Law Tribunal (NCLT) to have Shailendra Ajmera appointed as the new IRP, replacing Srivastava.

In its application to the NCLT filed on August 30, Glas Trust accused Srivastava of not adhering to the Insolvency and Bankruptcy Code (IBC), 2016, which mandates that the first meeting of the Committee of Creditors (CoC) be held within seven days of the CoC’s formation.

Section 9 of the IBC, 2016 allows operational creditors to initiate insolvency proceedings against a debtor for unpaid dues exceeding a specified amount.

Srivastava resumed his role as the interim resolution professional for TLPL on August 14 and established the CoC on August 21.

The lenders’ statement asserts that Srivastava had confirmed in writing and verbally, including in court filings, that Glas Trust’s claim was verified and that it was a CoC member. However, on August 27, Srivastava abruptly ceased all communication with the lenders and Glas Trust, ignoring subsequent attempts by Glas Trust’s advisors to contact him about the insolvency process, the statement adds.

“Pankaj’s eleventh-hour pretextual arguments to the contrary should be seen for what they are: a clear intent to fraudulently disenfranchise GLAS Trust and the Lenders from the CoC,” the statement read.

BYJU’S insolvency-related events began on July 16 when the NCLT bench Bengaluru admitted a plea filed by the Board of Control for Cricket in India (BCCI), seeking to initiate a CIRP for BYJU’S parent company, TLPL.

CIRP, which stands for Corporate Insolvency Resolution Process, is a legal process under the IBC, 2016, aimed at resolving insolvency issues faced by corporate debtors in a time-bound manner, typically through restructuring or liquidation.

Glas Trust, representing some of BYJU'S creditors, is contesting the NCLAT’s approval of a Rs 158 crore settlement with the BCCI in the Supreme Court of India.

BYJU'S’ investors, including General Atlantic, Prosus, Peak XV, and Sofina, have also approached the apex court to address their concerns.

The edtech company, once riding high with a peak valuation of $22 billion in 2022, has seen its valuation decline by 99%.

(The copy was updated with additional information.)