India: NCLT initiates insolvency proceedings against Oyo subsidiary

Ritesh Agarwal. Photographer: Samyukta Lakshmi/Bloomberg

The National Company Law Tribunal (NCLT) has ordered a corporate insolvency resolution proceeding against hospitality unicorn OYO’s subsidiary, OYO Hotels and Homes Pvt. Ltd, over a dispute of ₹16 lakh. OYO said it had filed an appeal challenging the insolvency order.

The court ordered the insolvency proceedings on 30 March, with OYO given time until 15 April to submit its claims.

“Notice is given that the National Company Law Tribunal has ordered the commencement of a corporate insolvency resolution process of the OYO Hotels and Homes Pvt. Ltd on 30th March 2021 (w.e.f. 01st April 2021). The creditors of M/S. OYO Hotels and Homes Pvt. Ltd, are hereby called upon to submit their claims with proof on or before 15th April, 2021 to the interim resolution professional,” read the NLCT order.

Mint has reviewed a copy of the order.

Keyur Jagdishbhai Shah has been appointed as the acting interim resolution professional by NCLT on the insolvency proceedings.

OYO founder and chief executive, Ritesh Agarwal, took to Twitter on Wednesday clarifying that a claimant was seeking ₹16 lakh from OYO’s subsidiary leading to a petition at NCLT.

“OYO has paid that (amount) under protest and amount (is) already banked by the claimant. OYO has also appealed with the NCLAT about the matter. OYO is recovering from the pandemic steadily and our largest markets are operating profitably,” tweeted Agarwal on Wednesday.

In an official comment, an OYO spokesperson claimed that the dispute of the claimant is not with the named subsidiary in the order, OHHPL.

“We are surprised to hear that Hon’ble NCLT has admitted a petition against OHHPL, a subsidiary of OYO, for INR 16 lakhs in a contractual dispute, which dispute is not even with this subsidiary. We have filed an appeal. The matter is sub-judice and we would refrain from commenting further on the merits of the matter at this stage. We have strong faith and belief in the judicial system,” said an OYO spokesperson in a statement.

Earlier this year, an arbitral tribunal ruled in favour of Zostel Hospitality Pvt. Ltd, which owns Zostel Hostels and ZO Rooms, in a legal battle against Oravel Stays Pvt. Ltd, parent of Oyo Rooms, over the execution of term sheets between two parties in 2015.

After the order, Zostel claimed that its shareholders are entitled to 7% shareholding in OYO, which the latter strictly refuted.

In a recent interaction with Mint, Agarwal had said that OYO’s gross margins, at a group level, have recovered to 100% of pre-covid levels. He also added that the monthly bottom line for the company is steadily improving, with its India business being Ebitda positive.

In India, occupancy has returned to 55-60% of pre-covid levels, Agarwal had added.

This article was first published on livemint.com

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.