‘Need Funds To Survive’: Aakash Seeks NCLT Nod To Amend Articles Of Association

SUMMARY

Aakash Educational Services has pleaded with the NCLT to set aside its November 20 ruling that barred it from amending its articles of association

Senior counsel representing Aakash argued before the Tribunal that the firm urgently needs to secure funding “in order to survive and sustain its business”

They further warned that the Aakash could face a financial crisis as soon as February if it was not allowed to raise money either via equity or debt

Amid the ongoing bankruptcy proceedings against edtech startup BYJU’S, its coaching arm Aakash Educational Services has pleaded with the National Company Law Tribunal to set aside its November 20 ruling that barred it from amending its articles of association (AoA).

Senior counsel representing Aakash argued before the Tribunal that the firm urgently needs to secure funding “in order to survive and sustain its business,” Bar and Bench reported.

“These are physical classes. We have 5,000 teaching and non-teaching staff and 3.5 Lakh students. We need to raise funds,” they said.

They further warned that the Aakash could face a financial crisis as soon as February if it was not allowed to raise money either via equity or debt.

While its largest shareholder Manipal Systems, which owns a 40% stake in Aakash, is willing to provide fresh capital, the stay order is preventing it from doing so, they added.

The focal point of the legal battle is a petition filed by Blackstone-backed Singapore Topco, which owns a 6.97% stake in Aakash. It contended before the Tribunal last year that the amendment to the AoA would violate its rights under the previous merger framework agreement.

According to the petitioners, the resolution was an attempt to dilute their shareholding in Aakash, the only profitable subsidiary of BYJU’S, and give a greater say to big investors such as Manipal Systems.

On November 20, 2024, the NCLT blocked Aakash from passing a resolution to amend its AoA and asked it to maintain its governance structure until a final verdict was passed.

While the Karnataka High Court had stayed the NCLT ruling, granting interim relief to Aakash, the Supreme Court later slammed the brakes on the coaching giant’s amendment plan.

This comes at a time when the Byju Raveedran-led edtech startup is mired in troubles ranging from insolvency proceedings to unpaid dues to investors to allegations of fraud to mounting losses to government scrutiny to legal cases in India and the US.

Meanwhile, Aakash has been fighting its own battle. Last year, the offline coaching centre laid off some 80-100 employees, citing a shift to a new business model.