India's Supreme Court has stayed a tribunal ruling that had paused insolvency proceedings against Byju's, favoring U.S. creditors seeking $1 billion from the edtech giant.

On Wednesday, the Supreme Court halted the National Company Law Appellate Tribunal's recent approval of a settlement between the Board of Control for Cricket in India (BCCI) and Byju's. This stay means that the insolvency proceedings will now proceed.

This ruling marks another challenge for Byju's, once valued at $22 billion, as it faces financial difficulties.

The company's issues began when an Indian tribunal initiated insolvency proceedings last month after Byju's failed to pay over $19 million owed to the BCCI. The insolvency case was dismissed when Byju's CEO's brother, Riju Raveendran, agreed to pay the debt. However, the Supreme Court's recent decision has put this dismissal on hold.

U.S.-based Glas Trust, representing some U.S. lenders to a Byju's group company, opposed the halt on the insolvency process, arguing that Byju Raveendran's brother used the lender's capital to pay the BCCI.

Byju's raised over $2.5 billion, including a $1.2 billion Term B loan from U.S. creditors, between 2020 and 2021. The company aimed to go public in early 2022 with a valuation exceeding $40 billion but had to pause its IPO plans due to market disruptions caused by Russia's invasion of Ukraine.

Byju's has not commented on the recent ruling.

Over the past two years, Byju's has faced multiple crises, including missed financial reporting deadlines and revenue shortfalls exceeding 50%. Major investors like Prosus and Peak XV have raised governance concerns and are seeking legal action to remove founder Byju Raveendran and take control of the company, which has raised over $5 billion in equity and debt.

Last year, board members and the company's auditor resigned in protest.

The conflict escalated when Byju's reduced its valuation to $25 million for a rights issue, leading to backlash from investors including Prosus, Peak XV, Sofina, and the Chan Zuckerberg Initiative. Byju's has been ordered not to use the capital raised in the rights issue and to halt attempts at a second rights issue.

Prosus and BlackRock have written down their Byju's stakes to zero.