India’s top court clears way for Byju’s insolvency proceedings

India’s top court has put on hold a tribunal ruling that halted Byju’s insolvency proceedings in a win for U.S. creditors that are seeking $1 billion from the edtech startup.

The Indian Supreme Court ordered on Wednesday a stay on the National Company Law Appellate Tribunal’s recent approval of a settlement between the Indian cricket board BCCI and Byju’s. The stay on the order means that the insolvency proceedings will now resume.

The Wednesday ruling is the latest crisis for Byju’s, once India’s most valuable startup at $22 billion valuation.

The startup’s troubles began after the Indian tribunal court last month initiated insolvency proceedings for Byju’s after the firm failed to pay over $19 million it owed to the powerful cricket board.

Byju’s averted this when the CEO’s brother, Riju Raveendran, agreed to pay. An appeals tribunal then dismissed the insolvency case, a decision now put on hold by the Supreme Court’s ruling.

U.S.-based Glas Trust, which represents some U.S. lenders of a Byju’s group company, had opposed the halt on the insolvency process. They argued that Byju’s founder Byju Raveendran’s brother tapped the lender’s capital to pay the BCCI.

Byju’s had no immediate comment Wednesday.

Byju’s has been grappling with a series of crises over the past two years. The startup’s troubles surfaced when it missed financial reporting deadlines and fell short of revenue projections by over 50%.

Top investors, including Prosus and Peak XV, have alleged governance issues at the edtech firm. They are seeking legal action to remove founder Byju Raveendran and gain control over the firm, which has raised over $5 billion in equity and debt.

Last year, board members and the startup’s auditor abruptly resigned in protest.

The conflict intensified when Byju’s slashed its valuation to $25 million for a rights issue, prompting backlash from investors including Prosus, Peak XV, Sofina and Chan Zuckerberg Initiative. Byju’s, which has been legally prohibited to use the capital it raised in the rights issue, was also ordered to halt attempts at second rights issue.

Prosus and BlackRock have written down the value of their Byju’s stakes to zero.