Insolvency Case Against OYO Ends In Settlement
The NCLAT order brings a formal closure to the insolvency petition admitted against OYO subsidiary in March.
The National Company Law Appellate Tribunal allowed withdrawal of an insolvency petition against OYO Hotels and Homes Pvt. after the parties involved settled the matter.
The appellate tribunal on Wednesday passed the formal order allowing the withdrawal of the petition. Rakesh Yadav, a hotel owner who filed the case, informed the NCLAT that he has received full and final payment of the dues he claimed.
The National Company Law Tribunal had in March 2021 admitted the petition claiming default by OYO. The hotel chain filed an appeal against order and the NCLAT put the formation of the Committee of Creditors on hold and agreed to hear OYO's challenge.
The case also saw a number of intervention applications being filed claiming dues from OYO and opposing the withdrawal of the petition. The NCLAT, however, did not find merit in the applications against the withdrawal.
The appellate tribunal noted that none of the intervenors were claiming any demand. The only claims that were to be considered were the ones filed before the CoC was set up, and those did not qualify as default, it said.
The NCLAT, however, said its order will not come in way of any future application for insolvency resolution and the NCLT can look at those uninfluenced by observations made in the present case.
OYO cited the intervention applications as the reason behind the delay in final closure of the case. In its statement, the company said it will continue to work closely with its hotel partners for settling any pending claims.
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. We remain committed to building the most trusted brand for our partners and resolving all issues, as we’ve been proactively doing in the past.Rohit Kapoor, Chief Executive Officer, Oyo-India and Southeast Asia
What Was The Dispute About?
Yadav claimed he struck an agreement with OYO Hotels, giving the hospitality company an exclusive licence to operate and manage his Gurgaon hotel under the OYO brand. According to the agreement, Yadav was entitled to a payment of “benchmark revenue’’ of Rs 4.5 lakh on or before the 10th of every month.
Between July and December 2019, OYO Hotels defaulted on some payments, Yadav said, with the total unpaid amount around Rs 16 lakh. OYO contested this claim describing it as a contractual dispute. The NCLT, while admitting the petition, said Yadav was able to establish the existence of a debt and failure to pay the debt by OYO Hotels subsidiaries.