The insolvency process against hospitality company Oyo has been closed by the NCLAT, giving relief to the Softbank-backed company, especially as the claims by several operational creditors against the company had climbed to over Rs 200 crore.
The NCLAT on Wednesday allowed the withdrawal of the insolvency case against an Oyo subsidiary by a Gurgaon-based hotel owner, who had alleged dues of Rs 16 lakh, and NCLAT also dismissed intervention applications by other creditors against Oyo.
The Ahmedabad branch of the National Company Law Tribunal (NCLT) had in April ordered a corporate insolvency resolution process of Oyo Hotels and Homes Pvt Ltd, based on the complaint.
However, Oyo had appealed in the NCLAT and received a stay on the formation of a Committee of Creditors. The company has also made an off-court settlement with the hotel owner.
The NCLAT on Wednesday said that in view of the settlement between Oyo and the hotel owner, Oyo's appeal against the insolvency case has been allowed.
Several operational creditors were fighting an insolvency case against hospitality unicorn Oyo over alleged unpaid dues, including the Federation of Hotel and Restaurant Association of India (FHRAI), which represents several hotels across the country.
The NCLAT had to decide on whether these intervening creditors and their complaints should be admitted, given that the original party has sought to withdraw the case.
Interestingly, while hearing the arguments of some of the creditors, Oyo's counsel Mukul Rohatgi had said that of the Rs 225 crore of alleged claims against the company, only Rs 13 lakh worth of claims were valid.
"I am informed that of the alleged Rs 225 crore claims against Oyo by alleged operational creditors, the Insolvency Resolution Professional (IRP) has found prima facie only Rs 13 lakh," Rohatgi had said during the hearing.
It is now to be seen if the operational creditors who have not been allowed to join this case will approach higher courts against Oyo.
Meanwhile, OYO welcomed the decision of NCLAT and said 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. 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," it added.
First Published: IST