Another Byju’s insolvency professional in the eye of Aakash vs EY storm

This comes after Aakash, the coaching institute acquired by Byju’s in 2021, asked EY through multiple letters from January to 17 May to disclose all documents and communication in relation to transactions involving the company.

Aakash warned in a statement on Wednesday that it would pursue legal action if EY failed to provide the required information. The company alleged the audit firm had violated professional conduct in the ongoing insolvency resolution process of Think and Learn Pvt. Ltd., the parent company of the embattled edtech firm Byju’s.

EY, in a statement, said, "We refute all allegations. We treat matters of client confidentiality and conflict with utmost seriousness. Therefore, we cannot comment further on this matter."

The controversy centres around an alleged conflict of interest involving Shailendra Ajmera, the newly-appointed resolution professional (RP) in Byju’s insolvency proceedings. Ajmera, who is also a partner at EY, is the second RP in the case to come under scrutiny. His predecessor, Pankaj Srivastava, faced allegations of misconduct in the bankruptcy process in September and was eventually replaced.

Also read | Mint Explainer: Why Byju's creditors have dragged its insolvency professional to court

Now, Aakash and its largest shareholder, Manipal Health Systems, have alleged that Ajmera and EY acted in a dual capacity, advising both Byju’s and Aakash, resulting in a conflict of interest.

“...as majority shareholder in AESL (Aakash), our Client (Manipal Health) has been apprised that there are considerable correspondences in the records of AESL which show that E&Y was a constant factor, in both operations and advice, rendered to Mr. Byju Raveendran/byjus.com/AESL/Aakash Choudhry/Blackstone/our Client, the Manipal Group," Manipal Health said in its legal notice to EY on 21 May, a copy of which Mint has reviewed.

Dual roles

Raj Chandrachud, advocate for Aakash, told Mint that Ajmera had initiated various proceedings against Aakash since his appointment as Byju’s resolution professional.

“He has even filed a substantive oppression and mismanagement petition, which includes facts and figures that only a tax advisor could have known," Chandrachud said. “How every transaction occurred, how the debentures were converted, the valuation of shares, and the basis on which a debenture obligation of around ₹2,020 crore was converted into equity shares, Ajmera has provided all those calculations in detail."

Ajmera’s recent stint as the resolution professional for Go First, too, ended in conflict. The airline's lessors filed a contempt case against him, alleging mismanagement of grounded planes and asset deterioration. Go First was eventually ordered into liquidation after failing to secure a revival plan. 

Ajmera has previously handled insolvency proceedings for Ruchi Soya, Coffee Day Global, Rolta India, and the Supertech Orb Project.

Also read | Mint Explainer: The Aakash feud—Manipal vs Blackstone and the fight for control

The dispute's origin

Byju’s decided to acquire Aakash Educational Services in April 2021 in a deal involving 70% cash and 30% equity. Under the agreement, Aakash’s promoters—the Chaudhry family—and private equity giant 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.

A fierce legal battle followed for control of Aakash, involving shareholders, Ranjan Pai’s Manipal Group, Blackstone, the Chaudhary family, and Byju’s, which has been stuck in insolvency proceedings following more than two years of struggle.

In January, Mint reported that minority shareholders had approached the National Company Law Tribunal (NCLT) on proposed amendments to Aakash’s Articles of Association, alleging that the changes were aimed at diluting their stake and eroding governance rights. The minority investors, however, later withdrew the petition.

Key takeaways 

1. Aakash’s legal team accused EY of advising both Byju’s and Aakash, raising ethical concerns.
2. Manipal Health Systems, Aakash’s majority shareholder, sent a legal notice to EY demanding disclosure of transaction-related documents.
3. Shailendra Ajmera, the newly appointed resolution professional for Byju’s, is also a partner at EY and faces allegations of bias.
4. His tenure as Go First’s resolution professional ended in dispute, with allegations of mismanagement.
5. Aakash’s acquisition by Byju’s in 2021 led to a fierce shareholder dispute involving Manipal Group, Blackstone, the Chaudhary family, and Byju’s.