The National Company Law Tribunal (NCLT) has denied Byju's request to prevent Aakash Educational Services from holding an extraordinary general meeting (EGM) scheduled for October 29. The EGM aims to discuss a rights issue that could significantly impact Byju's ownership stake in Aakash.

Key Points of the NCLT Decision

• Byju's, currently undergoing insolvency proceedings, sought to block the EGM.
• The proposed rights issue could reduce Byju's shareholding in Aakash from 25% to less than 5%.
• NCLT observed that accepting Byju's plea would undermine the independent rights of the company.
• The tribunal stated that the proposed rights issue cannot be termed inequitable.

Aakash's Defense and Financial Situation

Aakash Educational Services defended the necessity of the rights issue, citing:

• Banks' unwillingness to extend further loans due to shareholder disputes.
• The company's current financial condition necessitates equity fundraising.

Legal Proceedings

• This marks Byju's second petition on the same issue.
• The case is scheduled for the next hearing on November 12.

The NCLT's decision highlights the complex interplay between corporate governance, shareholder rights, and financial necessities in the education technology sector.

In a significant development for the troubled edtech giant Byju's , the Supreme Court has rejected attempts to withdraw insolvency proceedings against the company. The dismissal comes in response to pleas filed by both the Board of Control for Cricket in India (BCCI) and Byju's promoter, Riju Raveendran.

Background of the Case

The insolvency petition was initially filed by the BCCI over unpaid dues amounting to ₹158.00 crore. Recently, the cricket board claimed to have reached a settlement with Raveendran, who had assured payment of the outstanding amount. Based on this proposed settlement, both parties sought to withdraw the insolvency proceedings.

Legal Hurdles

The path to withdrawal, however, has been fraught with legal obstacles. Prior to the Supreme Court's decision, both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) had refused to allow the withdrawal of the insolvency proceedings. The tribunals cited a crucial legal requirement: the approval of 90% of the Committee of Creditors is necessary for such a withdrawal.

Committee of Creditors' Stance

Complicating matters further is the position of US-based lenders, represented by GLAS Trust. These lenders hold admitted claims worth a staggering ₹11,432.00 crore, constituting 99.41% of the Committee of Creditors. In a move that likely influenced the Supreme Court's decision, these majority creditors opposed the request to withdraw the insolvency proceedings.

Implications for Byju's

The Supreme Court's dismissal of the withdrawal pleas places Byju's in a precarious position. Despite the company's efforts to settle with the BCCI, the insolvency proceedings will continue. This development adds to the mounting challenges faced by the once-celebrated edtech startup, which has been grappling with financial difficulties and regulatory scrutiny in recent times.

The case underscores the complexities of India's insolvency laws and highlights the significant role that creditors play in such proceedings. For Byju's, navigating this legal and financial maze will be crucial as it seeks to stabilize its operations and regain investor confidence.

As the insolvency process moves forward, all eyes will be on how Byju's manages to address the concerns of its creditors, particularly the US-based lenders who hold the majority of the admitted claims. The outcome of this case could have far-reaching implications not only for Byju's but also for India's startup ecosystem and the edtech sector at large.