SC Refuses To Halt Operations Of COC In Byju's Insolvency Case Section 12A of the Insolvency and Bankruptcy Code (IBC) allows for the withdrawal of an insolvency application if at least 90 per cent of the CoC members approve the withdrawal.

The Supreme Court has declined to halt the operations of the Committee of Creditors (CoC) involved in the insolvency resolution process of the Ed-tech firm Byju's. The CoC represents the creditors of a company during bankruptcy or insolvency proceedings.

The apex court had previously reinstated the insolvency process against Byju's on August 14, overturning an August 2 decision by the National Company Law Appellate Tribunal (NCLAT) that had permitted the settlement of Byju's approximately INR 158.9 crore debt with the Board of Control for Cricket in India (BCCI).

A Bench led by Chief Justice of India (CJI) DY Chandrachud, alongside Justices JB Pardiwala and Manoj Misra, decided not to issue an order restraining CoC meetings at this stage. The court emphasized that it would first review the case on its merits before making any decisions regarding the CoC's operations. "If we dismiss the appeal, then everything goes. If we dismiss their appeal, they cannot say, now go under section 12A. We need to hear on merits," the Bench noted.

Section 12A of the Insolvency and Bankruptcy Code (IBC) allows for the withdrawal of an insolvency application if at least 90 per cent of the CoC members approve the withdrawal. The appeal before the Supreme Court was filed by lenders challenging the NCLAT's decision to close the insolvency proceedings against Byju's parent company, Think & Learn.

The NCLAT had initially allowed the settlement before the CoC was established, reasoning that the source of the settlement funds was not disputed and thus there was no need to continue the insolvency process. US-based lenders contested this, arguing that the funds used for the settlement were tainted as part of a missing USD 533 million.

Riju Raveendran, Byju Raveendran's brother and a board member, defended the settlement, asserting that the funds used were clean and not part of the allegedly missing money. The dispute over the missing funds has been central to the conflict between the US lenders and Byju's.

Following the NCLAT's ruling that favored Byju's, Raveendran filed a caveat in the Supreme Court to ensure notification if the US lenders appealed. Subsequently, the US lenders, including non-bank loan agency Glas Trust Company LLC, appealed to the Supreme Court.

Byju's legal team argued that 98 per cent of the CoC members represent Glas Trust Company, and thus, delaying the CoC meeting until the next hearing date would not be prejudicial. Solicitor General Tushar Mehta supported this viewpoint, suggesting an interim order to maintain balance.

Despite these arguments, the CJI opted to proceed with the case on its merits and scheduled the next hearing without issuing an interim order.