Byju’s US lender asks NCLAT to bar Aakash from amending articles of association

Glas Trust Co. LLC, the US lender of bankrupt edtech firm Byju’s, has moved the National Company Law Appellate Tribunal (NCLAT) with a fresh plea that seeks to prevent Byju’s subsidiary Aakash Educational Services from amending its articles of association (AoA) for restructuring and fundraising. AoAs are a company’s internal rulebook that outlines how it will be governed and operated.

The plea follows the withdrawal of a petition on 25 February by Singapore VII Topco, backed by private-equity firm Blackstone, which challenged the proposed amendment. Singapore Topco had secured a stay from the National Company Law Tribunal (NCLT) in November 2024 that prevented Aakash from modifying its AoA.

On Tuesday the NCLAT agreed to hear the plea, issued a notice to Aakash and Byju’s resolution professional (RP), and deferred the hearing to 17 March.

Singapore Topco’s withdrawal and its impact

The proposed amendments were contested by minority shareholders on the grounds that they would dilute their rights. These included investors of Singapore VII Topco, which holds a 6.97% stake in Aakash. Blackstone argued that these changes violated a prior merger framework agreement (MFA).

Glas Trust joined the case later, arguing the proposed amendments would affect Byju’s insolvency proceedings. Lenders fear Byju’s could tap Aakash’s cash reserves or assets to manage its debt obligations and thus exacerbate the dispute. While Think & Learn (Byju’s parent company) has been under insolvency since July 2024, Aakash remains profitable.

Also read: As Byju’s-burnt private investors turn cagey, edtech startups take IPO route to grow

On 25 February, Singapore VII Topco told the NCLT it had decided to withdraw its petition challenging the AoA amendments. This possibly lifted the existing stay, clearing the path for Aakash to proceed with the amendments. Following this, Glas Trust moved the NCLAT seeking a fresh stay on the amendments, leading to the current deliberations.

Background of the dispute

The controversy dates back to an extraordinary general meeting (EGM) of Aakash on 20 November 2024 at which alterations to the AoA were to be considered and approved. Minority shareholders including Blackstone challenged these changes, alleging mismanagement and oppression. They contended that the amendments would dilute their stake in Aakash—a profitable entity that Byju’s acquired in 2021 for $1 billion.

Byju’s, which is struggling with mounting debts and operational hurdles, relies heavily on Aakash to keep its valuation stable. 

Concerns were also raised about Byju’s founder, Byju Raveendran, being allowed to represent Think & Learn Pvt. Ltd in Aakash’s affairs. Aakash countered these allegations, asserting that the MFA, which formed the foundation of the shareholders’ rights, had failed to materialise as intended. Consequently, Aakash argued that minority shareholders had no substantive rights.

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In November 2024, the NCLT restrained Aakash from implementing the amendments, citing potential harm to minority stakeholders. Aakash challenged the ruling in the Karnataka High Court, which overturned the NCLT’s decision and allowed the amendments to proceed. Blackstone and other minority shareholders then took the matter to the Supreme Court.

On 29 November, the Supreme Court instructed Aakash to seek a resolution from NCLAT while barring any AoA amendments until a decision was reached. However, on 6 December, the NCLAT declined to stay the NCLT’s order preventing Aakash from making changes to its AoA. Aakash and its largest shareholder, Manipal Health Systems, then approached the NCLT to have the restrictions lifted, but they remained in place.

Share swap and governance concerns

Aakash’s governance troubles stem from its acquisition by Byju’s in April 2021 in a deal involving 70% cash and 30% equity. Under the agreement, Aakash’s promoters—the Chaudhry family—and Blackstone were to receive shares in Think & Learn.

However, the share swap faced hurdles after the Chaudhry family refused to exchange their remaining stake, citing governance concerns. Byju’s later issued a legal notice to the family.

Adding to the complexity, Ranjan Pai, chairman of Manipal Education and Medical Group, emerged as Aakash’s largest shareholder in 2023 after converting a $300 million investment into equity. Pai’s total investments of $500 million between 2022 and 2023 were aimed at helping Byju’s clear debts and fund its operations. 

Pai now holds a 39% stake in Aakash, while Think & Learn owns 26%, Byju Raveendran 17%, the Chaudhry family 10% and Blackstone 8%.

In March 2024, Think & Learn and Aakash withdrew their merger petition from the NCLT, further clouding the governance and ownership dynamics of the company.

Also read: Blackstone bought this edtech at the peak of a funding frenzy. Now, it’s looking at an exit.