[Update] BYJU’S Moves NCLAT Against Aakash’s EGM

Update | 10:55 IST

Days after the NCLT rejected BYJU’S plea for an interim stay on Aakash Educational Services Ltd’s (AESL’s) extraordinary general meeting (EGM) to approve a rights issue, the troubled edtech’s parent Think & Learn has moved the NCLAT against the order.

During the proceedings, senior advocate CA Sundaram sought a stay to protect the interest of Think & Learn, which currently holds about 25% stake in AESL, news agency PTI reported.

Senior advocate Gopal Subaramanium, appearing for the respondents, said the EGM meeting on October 29 is only for AESL shareholders’ resolution. Following that, a letter of offer should be sent out to all shareholders to subscribe, he added. 

Meanwhile, a two-member bench of NCLAT Chennai, comprising Justice N Seshasayee and Jatindranath Swain, reserved its order on BYJU’S investor GLAS Trust’s application regarding the EGM yesterday.

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Original | October 25, 16:30 IST

In another setback for troubled edtech firm BYJU’S, the NCLT Bengaluru bench has reportedly rejected its plea for an interim stay on Aakash Educational Services Ltd (AESL)’s extraordinary general meeting (EGM).

AESL’s board plans to approve a INR 500 Cr rights issue on October 29, which could potentially reduce BYJU’S stake in the company from 25.75% to under 5%, Bar and Bench reported.

BYJU’S, currently undergoing insolvency proceedings, will be unable to participate in the rights issue. To protect its interest in AESL, the edtech giant opposed the EGM, citing violations of its shareholder and veto rights under Part B of the Articles of Association (AoA). 

The NCLT bench, comprising Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada, held that “a rights issue cannot be termed unequitable merely because a shareholder may not be able to participate.”

This marks BYJU’S second attempt to halt AESL’s EGM. Last year, Term B loan lenders of BYJU’S had opposed a similar meeting, with counsel for the Glas Trust arguing that the consortium, which holds about 40% of AESL, considered the meeting a “clear act of oppression.”

AESL is raising funds primarily to address a severe cash crunch and sustain its operations. Earlier this year, the company told the NCLT it urgently needed funds to cover expenses for its 5,000 staff and continue serving its 3.5 lakh students.

The latest development comes shortly after the NCLAT dismissed BYJU’S plea challenging an interim order maintaining the status quo on its shareholding in AESL. In July, the Supreme Court had also dismissed a plea by BYJU’S cofounder and director Riju Ravindran, along with the BCCI, challenging a ruling that prevented the cricket body from withdrawing its insolvency plea against BYJU’S without creditor approval.

Both NCLT and NCLAT have emphasised that an insolvency plea can only be withdrawn with 90% creditor consent.

BYJU’S insolvency proceedings continue to unfold. In June, two of its US-based subsidiaries—Tynker and Epic!—were sold at discounted prices by a group of lenders who had sued for repayment of a $1.2 Bn term loan B (TLB).

BYJU’S had acquired a controlling stake in AESL in 2021 for nearly $950 Mn–$1 Bn, making these developments a significant blow to its influence over the company.