OYO has vehemently denied what it called as “unverified” claims made by the Federation of Hotel & Restaurant Associations of India’s (FHRAI) regarding the ongoing insolvency resolution process with the National Company Law Appellate Tribunal (NCLAT). Currently, the matter stands adjourned.
In an exclusive communication to Hotelier India, the company clarified that the recent hearing on 2nd June, 2021 primarily included procedural follow-ups of the previous hearing. “As before, the interveners have now been asked to file applications. It is important to understand that their applications will be heard and decided subsequent to OYO’s submissions,” the organisation stated.
It added that the stay on the formation of the committee of creditors continues. OYO maintained its stand as before, that by the law, the interveners have no locus in this matter and their disputed claims are not grounds for intervention. The company further denied the “unverified and baseless rumors” made around the monetary claims involved in the matter. Since the matter remains sub-judice, it was unable to share any further information.
To bring readers up to speed, FHRAI recently issued a press release stating that NCLAT has allowed it to intervene on behalf of its member hotels who are operational creditors to OYO and are suffering on account of non-payments of debt by the accommodation service provider. It added that its members have filed claims before the Insolvency Resolution Process (IRP) of around INR 93 crores and expects more hotels to submit their claims before the next hearing on 21st June, 2021.
Senior Counsel, Kishnendu Datta, represents FHRAI and its member hotels who are claimants of INR 93 crores. The association added that there is close to overall INR 200 crores worth of claims by claimants in the OYO insolvency case with NCLAT. It stated that hotels have stated that OYO entered into various kinds of agreements, ranging from leave and license agreements to management services agreement with minimum return assurances, but, eventually breached the agreement terms.
“An insolvency case against OYO is going on. Over the last couple of years, a lot of our members reported to us about money owed to them and OYO refusing to pay them. FHRAI has pleaded to contest the case on behalf of its hotel members and NCLAT has allowed it. We are representing many distressed hoteliers who individually do not have the capacity to take on OYO,” said Pradeep Shetty, Jt. Honorary Secretary, FHRAI.
In its application to the Tribunal, the FHRAI has pointed out that a number of matters by several hoteliers are pending before various Courts against OYO. It claimed that the company closed a majority of its operations and offices across India to “further cheat member hotels and other similarly placed companies”.
“OYO operates its business under maze of more than a dozen subsidiary entities. These entities enter into agreements with hotels and the FHRAI has data of hundreds of such hotels that have reported payment defaults and other unethical business practices by OYO through these entities. The development so far in the case has given a sense of relief to several hotels across the country who felt shortchanged by OYO and the movement of consolidation of all victims of the hotel room aggregator is now gaining steam,” Shetty concluded.
