The National Company Law Tribunal directed on Wednesday the reinstatement of Byju's lenders Glas Trust LLC and Aditya Birla Finance Ltd. to the committee of creditors.
The tribunal said the rejig carried out by the resolution professional in the CoC, whereby Glas Trust and Aditya Birla Finance were ousted, was untenable. Pankaj Srivastava is the resolution professional in the case.
Srivastava had constituted the CoC on Aug. 21 following the Supreme Court's order that led to the resumption of Byju's insolvency proceedings. This CoC included both Glas Trust and Aditya Birla Finance. However, the CoC was reconstituted on Aug. 31, whereby both Aditya Birla Finance and Glas Trust were ousted.
Glas Trust and Aditya Birla Finance combine for 99.82% of the voting share in the CoC. Glas Trust has a voting share of 99.41%, and Aditya Birla Finance has a voting share of 0.41%.
"The CoC, once constituted, is final and cannot be revised by the interim resolution professional/resolution professional without the interference of the adjudication authority," the tribunal said.
The NCLT pointed out that the resolution professional acted on his own accord in the case, adding that he conducted himself with the intention to "mislead" the tribunal.
The NCLT directed the Insolvency and Bankruptcy Board of India to conduct a disciplinary proceeding against the resolution professional, noting that his actions in the case were prejudicial to all stakeholders.
The original CoC, which was constituted on Aug. 21, will now reconvene to decide on a fresh resolution professional to see through the insolvency process.
In October, the apex court set aside an order of the National Company Law Appellate Tribunal that put an end to the ed-tech firm's insolvency process. In effect, the insolvency process of the embattled firm was set to continue by virtue of the top court's order.
While setting aside the NCLAT order, the top court categorically stated that the due process of law was not followed by the appellate tribunal.
US-based lenders, represented by Glas Trust LLC, were before the apex court against the NCLAT-approved settlement, based on the allegation that the money used for the settlement was siphoned from them and that its sources were questionable.
It was Glas' contention that Byju's owes its lenders over Rs 11,000 crore and that the NCLAT ended the insolvency process following a small settlement of Rs 158 crore between Byju's and the BCCI.
Crucially, when the top court had stayed the NCLAT order before pronouncing its final order in the case, the committee of creditors was constituted and then re-constituted. The re-constitution resulted in the removal of US-based lenders from the committee even after establishing that their voting share in the CoC by value is 99.41%.
At the time, the resolution professional had contended that the claims of US-based lenders were 'contingent' in nature and therefore a removal from the CoC was essential.
Notably, the Delaware Supreme Court has backed the US-based lenders over a $1.2 billion loan default by the ed-tech firm, affirming that their claims are due and payable.
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