The National Company Law Tribunal (NCLT) ordered a stay on further proceedings against hospitality giant OYO’s subsidiary in an insolvency plea filed by a creditor earlier this month.
An insolvency plea was filed against OYO Hotels & Homes Private Limited (OHHPL) on April 1 by Conclave Infratech, which operates a chain of hotels in Hyderabad. However, earlier this week, on April 7, OYO said it had challenged the order for proceedings by the Ahmedabad bench of the NCLT and said that it had already settled the disputed amount worth INR 16 Lakh.
“The NCLAT provided a stay for the formation of Committee of Creditors (COC) in IBC proceedings against OHHPL, subsidiary of OYO. OHHPL appealed the order in front of NCLAT and explained that a demand draft of INR 16 Lakh (about $22K) was issued to the claimant under protest and the claimant has willingly banked the demand draft”, an OYO spokesperson said.
Under India’s Insolvency and Bankruptcy Code, 2016, the CoC or the Committee of Creditors is formed and authorized to decide upon the regular functioning of the company that is the debtor during the insolvency resolution process. Any creditor can take a company for insolvency over unpaid dues. Once a petition is admitted by the NCLT, a resolution professional is appointed who examines the claims of creditors and supervises the settlement of claims, if any.
As per the notification by the Insolvency Bankruptcy Board Of India (IBBI), an Interim Resolution Professional (IRP) had already been appointed to lead the insolvency proceedings on behalf of OYO. The IBBI urged all OHHPL creditors to share information regarding outstanding dues and other information before April 15.
The tribunal had earlier directed OYO Hotels and Homes to submit its claims with proof on or before April 15 to the interim resolution professional.
There was also a rumour that OYO filed for bankruptcy after which Ritesh Agarwal, founder and CEO of OYO had to come forward with a clarification.
“A PDF and text message is circulating that claims OYO has filed for bankruptcy. This is absolutely untrue and inaccurate. A claimant is seeking INR 16Lakhs (USD 22k) from OYO’s subsidiary leading to a petition at NCLT.” Ritesh Agarwal said in an earlier tweet
The financial creditors or those partners who are owed money by OYO will receive priority in case the NCLT decides to rule in favour of insolvency. However, a date of hearing has not been set, although the insolvency proceedings have been ongoing since March 30, 2021.
Several hotel partners working with OYO have in the past taken the hospitality startup to court over alleged non-payment of dues.