Oyo today found itself in a quandary today as The National Company Law Appellate Tribunal (NCLAT) on Wednesday closed insolvency proceedings against Oyo and one of its subsidiaries. NCLAT also disallowed the intervention of external parties including Federation of Hotel & Restaurant Associations of India (FHRAI).
Industry body FHRAI said in May it has been allowed by the NCLAT to intervene on behalf of hotels in the Oyo unit insolvency case before the tribunal. The association had filed the application on behalf of its member hotels in India, who it said at the time are operational creditors suffering hugely on account of non-payments of debt by Oyo.
On Wednesday the NCLAT closed proceedings for insolvency of Oyo’s subsidiary Oyo Hotels and Homes Private Limited (OHHPL), and allowed Oyo’s plea for setting aside the Insolvency and Bankruptcy Code case against OHHPL.
Oyo will continue to work closely with its hotel partners for the closure of any pending claim, the company said in a statement.
The order was passed in the matter concerning Oyo and hotelier Rakesh Yadav. Oyo had reached an out of court settlement with Yadav but scores of hoteliers had approached NCLT with claims against the company that were said to be upwards of Rs 200 crore.
However, it provided a little breather to the creditors by reserving their right to approach the corporate debtor (OYO) to enter into a settlement. Even though it will completely be the prerogative of the company whether it wants to settle the case with the hoteliers or not, an acknowledgement by the court gives an impetus.
The Ahmedabad bench of the NCLT had ordered commencement of the corporate insolvency resolution proceedings (CIRP) against Oyo Hotels & Homes based on the application filed by Yadav. The proceedings were initiated under the Insolvency and Bankruptcy Code (IBC). While Oyo appealed against the NCLT order in NCLAT, and NCLAT granted a stay on the formation of the committee of creditors, the process of filing claims against the company had been allowed previously
“We welcome the decision of NCLAT and that the matter has finally been laid to rest. We had already settled with the original claimant but subsequent interveners with vested interests who were not a party to the case had delayed its closure…Covid-19 has impacted the travel industry significantly and we believe the efforts of industry organizations should be to help resurrect the industry during this grim time. Despite today’s judgment, we welcome collaborative conversations with them and all other associations to work towards the resurgence of travel in India,” said Rohit Kapoor, CEO – India and Southeast Asia, Oyo.
Gurugram-based hotelier Rakesh K Yadav, who filed an insolvency plea with the National Company Law Tribunal (NCLT) against a unit of Oyo, withdrew the case after resolving the issue with the hospitality start-up in June.
