That's the composition of the board of that (rogue?) company. But YC partners decide who presents at YC demo day and who doesn't, so it's not a decision for the board to make.
Hey I replied to you above. I am not 100% sure how this will play out wrt demo day. I was convinced in August by Alex and Rosanna to delay presenting until the next demo day, obviously because they knew something I didn't. This was offered by YC as an option for the first time, I believe due to the volume of companies in the batch.
As callmevlad said, demo day itself would be a slightly different situation than whether the money is returned. My guess is that since if the money is not returned, YC remain active (if reluctant) investors, and the $150k convertible note offer was made with the tacit understanding that demo day would happen, they will be allowed to participate.