Byju’s EGM and Insolvency Concerns Spark Legal Disputes
The financial troubles of edtech giant Byju’s have taken another turn as Glas Trust, representing US entities that lent the company $1.2 billion, raised objections to an extraordinary general meeting (EGM) called by Byju’s subsidiary Aakash Institute. The concerns were voiced during a hearing in the National Company Law Tribunal (NCLT), amid ongoing insolvency proceedings against Byju’s.
Key Concerns by Glas Trust
- Representation on Aakash’s Board:
- Glas Trust questioned the role of Byju Raveendran, founder of Byju’s, on Aakash Institute’s board.
- They argued that since a Resolution Professional (RP) is overseeing Think & Learn (Byju’s parent company), Raveendran should no longer represent the corporate debtor on the Aakash board.
- The Trust criticized the RP for allowing Raveendran to continue or appointing representatives without qualification, enabling the EGM to proceed.
- Asset Mismanagement Allegations:
- Glas Trust accused the RP of neglecting his duty, allowing company assets to be misused during the insolvency process.
Minority Shareholders’ Opposition
Minority shareholders, including Blackstone, filed a mismanagement and oppression petition against Aakash’s management.
- They alleged the EGM aims to strip minority shareholders of their rights while granting special privileges to Manipal Education and Medical Group (MEMG), which holds a 40% stake in Aakash.
- Counsel for the minority shareholders termed this move “a clear act of oppression.”
BCCI Withdrawal and Insolvency Proceedings
Separately, the RP urged the tribunal to prioritize the withdrawal of insolvency proceedings filed by the Board of Control for Cricket in India (BCCI).
- The withdrawal stems from a Supreme Court ruling on October 23, which quashed an earlier settlement of Rs 158 crore between BCCI and Byju’s, stating that the matter must be resolved under the Insolvency and Bankruptcy Code (IBC).
- The RP argued that the NCLT, not the Committee of Creditors (CoC), is the appropriate body to decide on the withdrawal application.
Implications
This legal tangle highlights multiple layers of conflict within Byju’s:
- Operational Clarity: The questions raised over Byju Raveendran’s continued role point to gaps in compliance under insolvency protocols.
- Minority Rights: The alleged attempts to marginalize minority stakeholders could further complicate Aakash Institute’s governance structure.
- Insolvency Framework: The prioritization of withdrawal requests versus CoC formation will set a precedent for handling similar cases under IBC.
As Byju’s continues to grapple with legal, financial, and operational challenges, these disputes could delay resolutions, impacting its overall stability.
