Aakash sues EY over conflict of interest in ongoing insolvency case against Byju’s

Aakash Educational Services Ltd. (AESL) has escalated its legal battle against Ernst & Young LLP (EY), alleging a “serious conflict of interest” in the ongoing insolvency resolution process of BYJU’s (Think & Learn Pvt. Ltd.). In a letter dated May 17, 2025, AESL accused the global consultancy firm of breaching professional ethics by advising both BYJU’S and AESL despite their contentious relationship, and demanded immediate disclosure of all related communications.

AESL’s legal team claims EY acted in a “dual capacity” during sensitive negotiations involving corporate control and shareholder disputes between AESL and BYJU’S. The edtech giant BYJU’S had attempted to acquire AESL in 2021, but the deal collapsed amid allegations of mismanagement and financial impropriety. AESL alleges:

• EY provided advisory services to BYJU’S while simultaneously engaging with AESL, despite being aware of their litigated disputes.
• EY ignored fiduciary boundaries, prompting AESL to seek legal recourse to “protect the integrity” of insolvency proceedings.
• AESL has demanded EY cease all involvement in the matter and preserve records for potential litigation.

Legal Ultimatum
Sanjay Garg, AESL’s Legal Head, emphasized the gravity of the situation: “Institutional integrity cannot be compromised. Firms entrusted with high-stakes advisory roles must avoid conflicts that undermine trust.” The letter warns EY of legal action if it fails to confirm compliance and submit requested documents.

Background: A Failed Acquisition
The dispute stems from BYJU’S botched acquisition of AESL, which soured over allegations of unilateral board appointments and misuse of funds. BYJU’S, once India’s most valuable edtech startup, entered insolvency in late 2024 amid mounting debts and operational crises. AESL, now independently managed, has since locked horns with BYJU’S over governance and financial claims.

Earlier last month, Byju’s had filed an FIR against against resolution professionals Pankaj Srivastava, Dinkar Venkatasubramanian of Ernst & Young LLP, Rahul Agarwal, executive director at Ernst & Young, Lokesh Gupta, partner, E&Y, and GLAS Trust, the administrative and collateral agent for a group of lenders.

In November 2021, GLAS Trust Company LLC, acting as the administrative and collateral agent for a group of lenders, provided a $1.2 billion term loan to the edtech firm’s US-based subsidiary, Byju’s Alpha Inc, to support the company’s global growth plans. GLAS Trust had alleged that a series of wire transfers were carried out in April and July 2022 by Byju’s Alpha Inc., at the behest of the Corporate Debtor, fraudulently transferring approximately $533 million to a hedge fund based in the United States.

Following a breach of certain loan covenants by the edtech firm, GLAS Trust initiated insolvency proceedings against the edtech firm in India under Section 7 of the Insolvency and Bankruptcy Code.

Also See: Byju’s files FIR against resolution professional, EY partners