The National Company Law Tribunal (NCLT) on Wednesday deferred its ruling on a plea by the Byju’s management seeking a reversal of a previous order related to the $200-million rights issue.
Byju’s had appealed against an earlier order by the court that said that the funds raised via the rights issue should be parked in an escrow account. Byju’s has been looking to get the money freed up, so it can pay salaries and meet other financial commitments.
The tribunal noted that a third judge will be appointed to decide on the issue at a later date after the two-judge bench of the tribunal said that the judges had a difference of opinion on the issue.
Another hearing on the oppression and mismanagement suit filed by dissenting investors, including Prosus, General Atlantic, PeakXV and Safina, is scheduled for Thursday.
On March 29, Byju’s had concluded an extraordinary general meeting (EGM) to amend the company’s authorised share capital to give effect to the rights issue, a day after the NCLT had refused to grant a stay on the meeting. Sources close to the company had indicated that there were no objections raised against the resolutions proposed during the meeting.
Hours before the meeting, founder-CEO Byju Raveendran had extended an olive branch to dissenting investors, granting them a 72-hour window to participate in the rights issue, which was rejected by the dissenting group.
“Nothing has changed in the way the management operates and the information, financial transparency and governance controls we have been seeking. We are already protesting in NCLT so the question of participating in the current rights issue doesn’t arise,” sources close to the investor group had said on Monday.
Raveendran had blamed the miffed investors for being unable to pay salaries to employees, as the funds from the rights issue remain locked. The company has only partially paid salaries for the month of February, while March salaries have also been delayed.
On Sunday, the company let go of 500 more employees as part of a cost reduction plan announced in October last year. Laid off employees claimed that no notice period and PIP mechanism has been provided to them. Instead, they have been put on a gardening leave for 15 days, sources added.
“A few misguided foreign investors in Byju’s have obtained an interim order in late February, which has restricted usage of the funds raised through the successful rights issue. This irresponsible action by the four foreign investors has compelled us to temporarily hold the disbursal of salaries until the restriction is lifted,” the company management had said in an email to employees. The company said it is exploring “a parallel line of credit” to ensure that salaries are paid by April 8.