SC rejects Byju's RP petition, clears Aakash rights issue

BENGALURU: The Supreme Court has rejected petitions filed by Think & Learn, the parent of Byju's, and its US-based lender GLAS Trust Company, giving its subsidiary Aakash Educational Services (AESL) the green signal to proceed with its planned rights issue and raise funds.

The dismissal of the civil appeals upholds the National Company Law Appellate Tribunal's (NCLAT) order from last week, which rejected GLAS's plea to halt AESL's rights issue. The verdict clears the way for Aakash to move ahead with the rights issue, a step that will reduce Byju's stake in the company from 25.7% to below 5%.

Sanjay Garg, Head - Legal at AESL, said, "We welcome the Hon'ble Supreme Court's dismissal of the Civil Appeals filed by GLAS Trust and the RP, which sought to misuse insolvency proceedings to disrupt this legacy. This judgment reaffirms the strength of our position and upholds the integrity of the legal process."

The dispute follows a series of transactions that led to the Manipal Group acquiring a controlling stake in AESL. Byju's acquired AESL in 2021 in a deal valued at around $1 billion. The conflict stems from insolvency proceedings initiated against Think & Learn before the NCLT in Bengaluru. Shailendra Ajmera, Partner at EY, was appointed as the resolution professional (RP).

AESL, in which Byju's holds a 25% stake, announced a rights issue to raise working capital and sustain operations-a move objected to by GLAS Trust and the RP, who sought to restrain AESL's board from proceeding with it. Following the NCLAT's green signal, AESL convened an extraordinary general meeting (EGM) on Oct 29 to approve a proposal to increase its authorised share capital.

During the meeting, AESL Chairman Shailesh Vishnubhai Haribhakti reiterated that the rights issue and capital infusion are essential for the company's continued operations and sustainability. "In the interest of M/s Think & Learn, the rights issue is the only way that Aakash can continue its ongoing operations, which ultimately protects TLPL's (Think & Learn) investment," he said.