(Bloomberg) — An Indian court has allowed insolvency proceedings to begin against online tutor Byju’s and installed an interim resolution professional to replace the company’s former founder.
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The country’s powerful cricket governing body initiated the process – Byju used to sponsor the national team – and the court order invited other financial creditors, company employees and suppliers to take legal action. The “existence of a debt and a default in payment of the debt are clearly established”, the National Company Law Tribunal said on Tuesday, adding that it found no reason to deny the petition filed by the Board of Control for Cricket in India.
“This effectively means that the founders and existing board of directors lose control of Byju,” said Satwinder Singh, managing partner at Aekom Legal. “The resolution professional will now be responsible for carrying out the operations of the company and keeping it running until the insolvency process is completed.”
Byju’s, founded by professor Byju Raveendran, was valued at $22 billion at its peak, but faced financial and legal problems after its business folded. The appeal filed by the cricket board is one of several bankruptcy cases that Byju is facing in India and abroad.
“We wish to reach an amicable agreement with the BCCI and are confident that despite this order, an agreement can be reached,” a Byju spokesperson said in a statement. “In the meantime, our lawyers are reviewing the order and will take the necessary steps to protect the company’s interests.”
–With assistance from Sankalp Phartiyal.
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