Park proceeds from rights issue in an escrow account: NCLT to Byju’s

The National Company Law Tribunal’s Bengaluru bench has directed Byju’s to keep funds raised from its ongoing rights issue untouched in a separate escrow account till a plea filed by a group of four investors is disposed of.

The order was made public by the NCLT on Wednesday, after hearing a petition a day earlier. It was filed by investors Prosus, General Atlantic, Sofina, and Peak XV alleging oppression and mismanagement by the edtech company.

The tribunal also urged Byju’s to consider extending the closure date of its rights issue, which was set for February 28, so that the right of petitioning investors to participate in the fund-raise is not hindered.

Byju’s is raising $200 million through a rights issue from existing shareholders, which the investors have objected to, as it would force them to pump in more money or the value of their existing shares would depreciate.

“If the rights issue goes ahead, shareholding of the petitioners will come down from 24.5% to 2.5% if they do not subscribe; and there is the apprehension that if they subscribed, the money will be lost,” the counsel representing the investors stated during the hearing, adding that the rights issue is against several provisions of the Companies Act.

The investors had asked the tribunal to put a hold on the rights issue as an interim relief and direct Byju’s to share requested information. However, the NCLT has reserved judgement on the plea, asking both parties to file written arguments for the case within three days from the order.

On Wednesday, the NCLT also issued notice to Byju’s on a petition filed by the representative of a consortium of foreign lenders of the controversial $1.2 billion term loan. The lenders have sought to initiate insolvency proceedings against Think & Learn Pvt Ltd, its parent company, after it failed to make repayments worth Rs 8,000 crore.

Byju’s has been directed to file its response within three weeks. Three separate insolvency pleas against Byju’s have additionally been received by the NCLT from the company’s vendors and the Board of Control for Cricket in India (BCCI) for failure to pay dues.