As several operational creditors are fighting an insolvency case against hospitality unicorn Oyo over alleged unpaid dues, advocate Mukul Rohatgi, who appeared for the Softbank-backed company, told the National Company Law Appellate Tribunal (NCLAT) on Monday that most of the claims against the company are not credible.
Interestingly, while hearing the arguments of some of the creditors, NCLAT judge Justice Anant Bijay Singh remarked that the IBC needs a separate provision for startups, which have no assets.
"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 said.
However, the IRP is still to put the details of the total amount claimed by creditors on record. The IRP did not give a comment to CNBC-TV18 on the statements made by the Oyo counsel.
While Oyo has settled a matter with a Gurgaon-based hotel owner which had initially dragged the company to NCLT over non-payment of dues of Rs 16 lakh, several other creditors have now intervened in the matter, including the Federation of Hotel and Restaurant Association of India (FHRAI), which represents several hotels across the country.
The NCLAT now has to decide on whether these intervening creditors and their complaints should be admitted, given that the original party has sought to withdraw the case.
The judge also remarked how an insolvency case can proceed against a company that has no brick-and-mortar assets.
"The IBC should take into consideration separate provisions for startups and unicorns. Oyo is a startup but has no property. Even if there is liquidation, there will be nothing. There can be no conventional solution for startups under IBC," he remarked
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, over a payment default of Rs 16 lakh to the Gurgaon-based hotel owner.
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.
Rohatgi on Monday questioned the role of the intervenors in the matter, and particularly hit out at FHRAI. "How can the Federation of Hotel and Restaurant Association of India, which is an association of 1000 hotels, be an operational creditor? FHRAI is a rival to Oyo," he added.
The matter has been posted for hearing by the NCLAT next on June 23.