Hyderabad based Hotel files insolvency application against Oyo with the NCLT

Oravel Stays Private Limited (Oravel), doing business as OYO Rooms which owns and operates hotels is bearing the brunt as a Hyderabad based hospitality firm Conclave Infratech (Conclave) has filed an insolvency application against Oravel with the National Company Law Tribunal’s (NCLT) Ahmedabad Bench. It has been alleged that Oravel breached the contract for monthly payments of nearly Rs. 13 lakh every month since May 2018.

Conclave Infratech, which owns ‘The Conclave Hotel’ in Hyderabad, was being managed by Oyo Rooms. In its application, Conclave Infratech claimed that as per the terms of the agreement signed between Conclave and Oyo, Oravel would pay Conclave, an assured benchmark revenue, which is minimum business guarantee of Rs. 12,96,000 every month irrespective of bookings.

Oyo has however disputed the liability and this being a corporate commercial dispute, the petition itself before the NCLT is not maintainable according to OYO.

Conclave – the corporate creditor, in its application, claimed it received the minimum guarantee payment from Oyo – the corporate debtor only for two months between May 2018 and May 2019 whereas in all the other months, the amount paid was way below the minimum guaranteed revenue. The application further stated that Oravel reduced the minimum assured sum to Rs. 9,96,000 in May last year citing incurring losses. Conclave termed the development as “fraudulent”.

According to the insolvency petition, the corporate creditor is claiming cumulative claims from Oyo to the tune of around Rs. 82.50 lakhs. OYO has been served a demand notice to that effect.

According to Oyo, talks for dispute resolution and reconciliation are underway.