Byju’s moves Karnataka HC against NCLT order barring second rights issue
The plea is likely to come up for hearing on June 24. Before that, the plea was heard on June 18 and 21.
The orders of NCLT were expected to be challenged before the National Company Law Appellate Tribunal (NCLAT). However, Byju’s has filed a writ petition in the Karnataka High Court, which is usually filed against the violation of fundamental rights.
The National Company Law Tribunal (NCLT) Bengaluru on June 12 told Byju’s to maintain the status quo with regard to existing shareholders and their shareholding. “Status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition,” the order that was made available on June 13 said.
This means that Byju’s is restricted from issuing shares and using funds raised from a $200 million rights issue until the tribunal decides the matter. The matter will be heard on July 4.
The second rights issue started on May 13 and was expected to end on June 13. With that, Byju’s was not allowed to utilise any funds it had collected from the second rights issue, and the amount from the second rights issue had to be deposited in a separate account.
NCLT had also directed Byju’s to file the complete details of the concerned escrow bank accounts from the opening of the rights issue on January 29 to date within 10 days from June 12.
According to industry sources, the legal battles are expected to adversely impact the edtech firm’s ability to run its operations, pay the pending amount to the vendors, as well as salaries to the employees.
Byju’s is facing multiple challenges, including a cash crunch, delays in financial reporting, and legal disputes with lenders and investors.
Byju’s is also grappling with another setback as it faces delays in paying salaries to employees. The delay stems from funds raised through a recent rights issue, which have been locked in a “separate account” due to the ongoing dispute with investors.
Byju’s and its investors are fighting at the National Company Law Tribunal (NCLT) over the company’s rights issue of $200 million in a petition alleging mismanagement.
The four investors, Prosus, General Atlantic, Sofina, and Peak XV Partners (formerly Sequoia India & Southeast Asia), had sought a stay on the rights issue at less than 99 per cent enterprise valuation compared to Byju’s peak valuation of $22 billion.
First Published: Jun 23 2024 | 6:13 PM IST