Oyo has reached an out-of-court settlement with hotelier Rakesh Yadav, but scores of others had approached NCLT with claims against the company that were said to be upwards of Rs 200 crore.
New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Wednesday allowed withdrawal of the Oyo insolvency case, in a major setback to scores of hoteliers who had filed claims against Oyo Hotels & Homes basis the proceedings.
The order was passed in the matter concerning Oyo and hotelier Rakesh Yadav. Oyo reached an out of court settlement with Yadav but scores of hoteliers had approached the National Company Law Tribunal (NCLT) with claims against the company that were said to be upwards of Rs 200 crore.
The Ahmedabad bench of the NCLT had ordered commencement of the corporate insolvency resolution proceedings (CIRP) against Oyo Hotels & Homes based on the application filed by Yadav. The proceedings were initiated under the Insolvency and Bankruptcy Code (IBC). While Oyo appealed against the NCLT order in NCLAT, and NCLAT granted a stay on the formation of the committee of creditors, the process of filing claims against the company had been allowed previously.
In an order dated July 7, NCLAT has allowed Oyo’s withdrawal appeal and the NCLT order has been set aside. The intervention of hoteliers is disallowed.
Rohit Kapoor, Oyo’s CEO for India & Southeast Asia, said the company had already settled the matter with the original claimant but subsequent intervenors with “vested interests” had delayed its closure.
“We welcome the decision of NCLAT and that the matter has finally been laid to rest. Covid-19 has impacted travel industry significantly and we believe the efforts of industry organisations should be to help resurrect the industry during this grim time,” Kapoor said. “Despite today’s judgement, we welcome collaborative conversations with them and all other associations to work towards the resurgence of travel in India.”
Oyo’s counsel Khaitan & Co. said it was a “straightforward” case where the two parties involved had settled the matter. There was no room for any interventions, which has now been upheld by the tribunal, it said.
Pradeep Shetty, joint honorary secretary at Federation of Hotel & Restaurant Associations of India (FHRAI) which had also filed an application in NCLAT on behalf of its member hotels, said FHRAI will examine the option of filing an appeal.
“It is disappointing for hundreds of hoteliers whose claims could have gone into these proceedings itself and they would have got their dues,” Shetty said. “If the intervention of hoteliers is disallowed, it would mean more hardships for creditors who have not been paid by Oyo for so many years. We are advising members to start filing their individual claims.”
Another hotelier said there are many matters filed with NCLT that were infructuous because of the Rakesh Yadav matter. “So those matters should restart again. The hotelier claimants group is united and is considering approaching NCLT again,” he said.
The court had concluded hearings in the Oyo insolvency case on June 23.