Supreme Court Upholds Insolvency Proceedings Against Byju’s,Dismisses Withdrawal Petitions

In a meaningful development for the beleaguered edtech giant Byju’s,the Supreme Court has dismissed petitions filed by the Board of Control for Cricket in India (BCCI) adn Riju Ravindran,brother of Byju Raveendran,seeking the withdrawal of insolvency proceedings. the apex court also refused to entertain a settlement proposal between Byju’s and the BCCI.

A bench comprising Justices JB Pardiwala and R Mahadevan ruled against interfering with an earlier order from the National Company Law Appellate Tribunal (NCLAT). The NCLAT had stipulated that any settlement proposal, having been filed after the formation of the Committee of Creditors (CoC), would require approval under Section 12A of the Insolvency and Bankruptcy Code (IBC).Previously, in February 2025, the National Company Law Tribunal (NCLT) had directed the proponents of the settlement to present their proposal to the newly constituted CoC. This committee includes Glas Trust, a US-based entity acting as trustee for lenders to whom Byju’s owes a substantial $1.2 billion. The NCLAT had formally initiated the corporate insolvency resolution process (CIRP) against Byju’s in July of the previous year. This move followed the admission of the BCCI’s claim, amounting to ₹158.90 crore, recognizing it as an operational creditor of the edtech firm.

an interim resolution professional (IRP) was appointed to manage the proceedings. Later, a settlement was reportedly reached between Byju’s and the BCCI, leading Byju Raveendran to approach the NCLAT. On August 2, 2024, the NCLAT had initially dropped the insolvency proceedings against Byju’s, which had a team sponsorship agreement with the BCCI since 2019, after sanctioning a settlement of outstanding dues. Though, this decision was subsequently challenged in the Supreme Court by Glas Trust.

A bench, then headed by the Chief Justice of India DY Chandrachud, had placed a stay on the NCLAT’s order. The court further directed the BCCI to deposit the relevant funds into a separate escrow account pending further adjudication.

In a related but separate legal challenge, Byju’s Alpha, a special purpose vehicle established in the US by Byju’s to manage proceeds from a $1.5 billion Term Loan B, has filed a lawsuit against Byju Raveendran and his wife, Divya Gokulnath. The lawsuit accuses them of “orchestrating theft of $533 million.” Following a judgment by the United States Bankruptcy Court for the District of Delaware against Riju Ravindran and Byju’s ultimate Indian parent company, Byju’s Alpha has now initiated legal action against Byju Raveendran, co-founder and wife Divya Gokulnath, and an advisor, Anita Kishore.

The lawsuit asserts that the defendants collectively planned and executed an illicit scheme to conceal and misappropriate $533 million in loan proceeds,referred to as the ‘Alpha Funds’. According to a press release, the plaintiffs contend that Byju, Divya, and Anita deliberately obscured the assets of Byju’s Alpha and engaged in repeated deception regarding the location of the funds to illegally divert money rightfully owed to the Lenders.

What specific financial metrics, beyond revenue, should creditors prioritize when evaluating Byju’s resolution plan during NCLT proceedings?

Supreme Court Rejects Byju’s Insolvency Plea, Denies Settlement Options

The Ruling and its immediate Impact

On july 22, 2025, the Supreme Court of India delivered a meaningful blow to edtech giant Byju’s, rejecting its plea for protection from insolvency proceedings initiated by lenders. The court also dismissed Byju’s requests for extended timelines to negotiate a settlement with its creditors. This decision intensifies the ongoing financial crisis facing the company and raises serious questions about its future. The core of the dispute revolves around unpaid debts totaling over $1.2 billion.

Key takeaways from the ruling include:

No Stay on NCLT Proceedings: The Supreme Court refused to halt the National Company Law Tribunal (NCLT) proceedings initiated by lenders. This means the insolvency process can now proceed.

Settlement Timeline rejected: Byju’s request for a six-month extension to reach a settlement with its creditors was denied, signaling the court’s impatience with the protracted negotiations.

Focus on Creditor Rights: The court emphasized the importance of protecting the rights of financial creditors and ensuring a fair resolution process.

Delayed Financial Results: The company faced repeated delays in filing its audited financial statements for 2021-22 and 2022-23, raising concerns about transparency and financial health.

Funding Winter: The global funding environment for startups, particularly in the edtech sector, has tightened considerably, making it difficult for Byju’s to secure fresh capital.

operational Challenges: Aggressive expansion plans and high marketing costs, coupled with a slowdown in student enrollment, strained the company’s finances.

Legal Disputes: Multiple legal battles with creditors, investors, and regulatory bodies added to the complexity of the situation. This includes disputes with Aakash Education and various investors like Peak XV Partners (formerly Sequoia Capital India).

Aakash Education: A significant operational creditor due significant payments.

Davidson Kempner Capital Management: A US-based investment firm that acquired debt from other lenders.

Various Banks and Financial Institutions: Holding substantial loan amounts.

Implications for Investors and the Edtech Sector

The Supreme Court’s decision has far-reaching implications for Byju’s investors, employees, and the broader edtech industry.

Investor Losses: Investors, including prominent venture capital firms, are likely to face significant losses if Byju’s is unable to recover.

Employee Uncertainty: The future of Byju’s employees remains uncertain, with potential job losses looming.

Edtech Sector Scrutiny: The Byju’s crisis has triggered increased scrutiny of the edtech sector, with investors and regulators demanding greater transparency and financial discipline.

Impact on Valuation: The incident will likely impact the valuation of other edtech companies, particularly those reliant on venture funding.

Byju’s response and Future Options

Following the supreme Court ruling, Byju’s has expressed its disappointment and reiterated its commitment to resolving the financial crisis. The company stated it is exploring all available legal options and remains focused on negotiating a settlement with its creditors.

Potential options for Byju’s include:

Accelerated Settlement talks: Intensifying negotiations with creditors to reach a mutually acceptable resolution.

Asset Sales: Divesting non-core assets to raise funds.

Strategic Partnerships: Seeking partnerships with other companies to inject capital and expertise.

Restructuring: Implementing a comprehensive restructuring plan to reduce debt and improve operational efficiency.

Case Study: The WeWork Parallel

The Byju’s situation draws parallels to the downfall of WeWork. Both companies experienced rapid growth fueled by venture capital, followed by a period of unsustainable expansion and financial mismanagement. WeWork ultimately filed for bankruptcy, highlighting the risks associated with high-growth, capital-intensive business models. The Byju’s case serves as a cautionary tale for other startups in the edtech space, emphasizing the importance of lasting growth, financial prudence, and transparent governance.

Practical Tips for Investors in the Edtech Sector

Given the current market conditions and the Byju’s crisis, investors in the edtech sector should consider the following:

Due Diligence: Conduct thorough due diligence on potential investments, focusing on financial stability, revenue models, and operational efficiency.

Valuation Realism: Avoid overpaying for investments based