In a significant turn of events, the Karnataka High Court has once again extended the stay on the resolutions passed by investors at BYJU’S extraordinary general meeting (EGM) held on February 23 this year, offering a temporary reprieve to the embattled edtech startup.
The decision, as reported by NDTV Profit, comes as a relief for BYJU’S amidst a tumultuous period marked by legal battles and financial challenges. Notably, the resolutions passed during the EGM, orchestrated by prominent investors including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, encompassed pivotal decisions such as the potential ouster of founder and CEO Byju Raveendran, alongside the removal of Divya Gokulnath and Riju Raveendran from their managerial positions.
Moreover, the resolutions also advocated for a restructuring of the company’s board and called for a comprehensive forensic investigation into various aspects of BYJU’S operations, including its acquisitions, regulatory compliance, and tax filings, among others.
The court’s decision to extend the stay effectively means that Byju Raveendran will continue to lead the company, thwarting the attempts to alter the existing management structure.
This latest development underscores BYJU’S ongoing legal saga, which commenced prior to the EGM when the startup sought interim relief from the impending decisions of its shareholders. The High Court has now issued its third consecutive stay order on the implementation of these resolutions, reiterating its decision to uphold the status quo.
During the previous court proceedings in March, BYJU’S legal counsel highlighted glaring discrepancies in the affidavits submitted by the investors’ representatives, raising questions about the integrity of the process. The court, after due deliberation, instructed both parties to present their arguments on the matter in today’s hearing.
For BYJU’S, the legal hurdles coincide with a challenging financial landscape, characterized by a cash crunch and a significant decline in valuation. Despite once commanding a valuation of $22 billion, the company’s worth has plummeted to $225 million amidst a barrage of legal and financial setbacks.
Notably, BYJU’S recently undertook a rights issue, raising $200 million to alleviate its financial woes. However, the utilization of these funds remains stalled following directives from the National Company Law Tribunal (NCLT) instructing the company to segregate the proceeds in a separate escrow account amidst ongoing legal disputes with disgruntled investors.
In addition to its legal skirmishes with investors, BYJU’S has found itself embroiled in disputes with various entities including Oppo, Teleperformance, the Board of Control for Cricket in India (BCCI), McGraw Hill, Cogent E-services, and AG Automation.
Furthermore, the company’s director and CEO’s brother, Riju Raveendran, faces contempt charges in the United States Bankruptcy Court for the District of Delaware, adding to BYJU’S litany of woes.
Amidst these challenges, BYJU’S has initiated a strategic shift towards BYJU’S 3.0, implementing revised product pricing and sales strategies in a bid to navigate through the turbulent waters of the edtech landscape.
