Hearing BYJU’S petition against the NCLT’s order, the Karnataka HC sent the matter back to the Tribunal for a fresh consideration
Last month, the NCLT restrained BYJU’S from proceeding ahead with its second rights issue
BYJU’S investors argued that the startup was going ahead with the second rights issue in violation of the NCLT’s order
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The Karnataka High Court (HC) has reportedly set aside the National Company Law Tribunal’s (NCLT’s) interim order, passed right month, restraining embattled BYJU’S from undertaking a second rights issue.
Hearing BYJU’S petition against the NCLT’s order, Karnataka HC’s Justice SR Krishna Kumar sent the matter back to the Tribunal for a fresh consideration, Bar and Bench reported.
BYJU’S declined to comment on the development.
The HC order will come as a relief for the cash-starved edtech startup. Last month, hearing a petition filed by investors General Atlantic Singapore and Sofina S.A., the NCLT asked the Byju Raveendran-led company to maintain the status quo with regard to existing shareholders and their shareholding.
It asked BYJU’S to not proceed with the second rights issue till the petition against the first rights issue was disposed of.
The petitioners argued that BYJU’S proposed a second rights issue by way of an offer letter dated May 11, which opened on May 13 and is scheduled to end on June 13.
Meanwhile, sources at BYJU’S then told Inc42 that there was no second rights issue and the rights issue being referred to by the investors was an extension of its previous $200 Mn rights issue.
They said that while BYJU’S received commitments worth over $200 Mn for the rights issue, it was able to close it partially as some of the commitments didn’t translate to fund infusion. As a result, the company floated the new offer.
Following the Tribunal’s stay, BYJU’S moved the Karnataka HC against the NCLT order. The next NCLT hearing in the matter is scheduled for July 4.
Behind the courtroom drama is BYJU’S contentious rights issue. It is pertinent to note that the proceeds raised by BYJU’S from its first rights issue are also held in a separate escrow account, as per the NCLT’s order.
BYJU’S, once the poster child of the edtech ecosystem, is currently in the news for all the wrong reasons. From multiple insolvency cases, allegations of hiding funds, and rising losses to a severe cash crunch, fight with investors, and layoffs – the startup is dousing fires on multiple fronts.
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