NCLAT Stays Initiation Of Insolvency Proceedings Against Yatra’s Subsidiary

The National Company Law Appellate Tribunal (NCLAT) has stayed the National Company Law Tribunal (NCLT) order to initiate a corporate insolvency resolution process against TSI Yatra, a subsidiary of online travel aggregator (OTA) Yatra.

This comes days after the travel tech major said that Ezeego Travels & Tours Ltd, which is currently under liquidation, filed a petition with the NCLT for initiating corporate insolvency resolution against TSI Yatra. 

In an exchange filing on Friday (October 18), Yatra said that the erstwhile Director of TSI Yatra filed an appeal before the NCLAT yesterday, challenging the NCLT’s order.

The NCLAT, in an order dated October 18, stayed the operation of the NCLT’s order. 

This development follows the NCLT’s decision on October 15 to admit a petition filed by Ezeego for initiating the Corporate Insolvency Resolution Process (CIRP) against TSI Yatra under the Insolvency and Bankruptcy Code, 2016.

Ezeego claimed unpaid dues of INR 21.97 Cr from TSI Yatra, including INR 14.86 Cr as principal outstanding and INR 7.1 Cr in interest. 

TSI Yatra had sought dismissal of the claim, arguing that it was subject to reconciliation and that the date of default fell within the period covered by Section 10A of the IBC.

The stay order from the NCLAT provides temporary relief for Yatra and its subsidiary as they continue to navigate this legal challenge. 

The impact of these proceedings on Yatra’s overall operations remains to be seen, given that TSI Yatra is a material wholly-owned subsidiary that is consolidated into Yatra’s financials.

This legal battle comes at a time when Yatra has been actively expanding its business through strategic acquisitions. In September 2024, the company acquired Globe Travels for INR 128 Cr to strengthen its position in the corporate travel sector, adding 350 new corporate clients to its existing base of 850 corporate customers.

In its most recent financial results for Q1 FY25, Yatra reported a consolidated net profit of INR 4.04 Cr, marking a 32.5% decline from INR 5.99 Cr in the year-ago quarter. The company’s operating revenue also saw a decrease, falling to INR 100.80 Cr, down 8.5% year-on-year.

On the stock market front, Yatra’s shares have been under pressure recently. The stock hit an all-time low of INR 119.50 during intraday trading on October 8, 2024. 

Today, shares of Yatra closed at INR 121.30 on the BSE, down 0.25% from the previous close.