No, not bankruptcy! Oyo insolvency admitted by NCLT for Rs 16 lakh dispute–business today

Clipped from: https://www.businesstoday.in/current/corporate/no-not-bankruptcy-oyo-insolvency-admitted-by-nclt-for-rs-16-lakh-dispute/story/435960.html

Oyo Founder and CEO Ritesh Agarwal has dismissed rumours that Oyo has filed for bankruptcy

Oyo Founder and CEO Ritesh Agarwal

A fresh case of insolvency has been filed against the subsidiary of Oyo over a dispute of Rs 16 lakh. The National Company Law Tribunal (NCLT) has admitted the case and ordered the commencement of corporate insolvency proceedings on March 31, 2021. The NCLT has ordered the creditors of Oyo Hotels and Homes Private Limited (OHHPL), Oyo’s subsidiary, to submit their claims by April 15 to the interim resolution professional (IRP) based in Ahmedabad.

Oyo, however, has challenged the NCLT order against its subsidiary. In an official statement, Oyo said that it’s surprised to hear that NCLT has admitted a petition against OHHPL in a contractual dispute. “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 our judicial system,” said an Oyo spokesperson.

Oyo claims that the Rs 16 lakh in dispute has already been paid to the claimant under protest by the entity with whom the dispute was raised (which is separate from OHHPL).

Meanwhile, Oyo Founder and CEO Ritesh Agarwal has dismissed rumours that Oyo has filed for bankruptcy. He has clarified the misinformation is linked to the Rs 16 lakh dispute.

This is not the first time  Oyo has been in the bankruptcy soup. In 2020, for instance, Hyderabad-based Conclave Infratech had reportedly filed an insolvency application against Oyo’s parent company Oravel Stays Pvt Ltd over unpaid dues. Oyo has been in the cross hairs of some of its hotel partners. These hotel partners allege that Oyo is following unfair business practices, and a bunch of them have snapped ties with the hotel chain over the past two-three years.

Due to pandemic, the past one year has been tough for the entire hospitality sector, and SoftBank-backed Oyo is no different. Early last year, Oyo had to scale down its operations by exiting out of some 200 cities, laying off employees, and restructuring its businesses.

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