SC dismisses Byju’s RP, Glas Trust petitions, paving way for Aakash’s planned rights issue

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The Supreme Court has dismissed petitions filed by Shailendra Ajmera, resolution professional for Think & Learn (Byju’s parent company) and also Partner at EY, and  its US-based lender Glas Trust Company, paving the way for subsidiary Aakash Educational Services to go ahead with its proposed rights issue.

The bench on November 3 refused to interfere with an earlier order of the National Company Law Appellate Tribunal (NCLAT) that had upheld Aakash’s decision to proceed with the fundraising plan.

Aakash, a subsidiary of Byju’s, had announced a rights issue to raise funds for operational requirements. The move, however, will significantly dilute the stake of Byju’s parent from about 25.75 percent to less than 5 percent. As the company is currently under insolvency proceedings, it cannot participate in the issuance of new shares.

Byju’s counsel had previously argued that Aakash is a major asset for Think and Learn, and any depletion in its value would severely impact the company. Byju’s had acquired Aakash Institute for $950 million in 2021.

Earlier, Glas Trust as well as Think & Learn’s resolution professional, both

had objected to the proposal, first before the National Company Law Tribunal (NCLT) and later in the NCLAT. However, both tribunals dismissed the objections and prompted the lenders to move the Supreme Court, which has now upheld the previous order.

Glas Trust, which holds 99.41 percent voting rights in Think and Learn’s committee of creditors, had argued that Aakash’s rights issue was not a genuine business move but a deliberate attempt to erode Byju’s ownership value and side-step existing court orders.

The Supreme Court’s dismissal of these appeals gives Aakash a free hand to go ahead with its capital raise. On October 29, Aakash’s shareholders had approved a proposal to increase the company’s authorised share capital.

Aakash’s counsel had previously argued that the rights issue is necessary to raise funds, as banks are not willing to extend further loans to the company due to shareholder disputes and its “precarious financial health”.