NCLAT Grants Relief to OYO Subsidiary By Staying Order of Insolvency Proceedings Against It
The National Company Law Appellate Tribunal (NCLAT) has ordered a stay on the formation of the committee of creditors (CoC) in the insolvency & bankruptcy proceedings Oyo Hotels & Homes Pvt. Ltd. (OHHPL) the subsidiary of Oyo's parent Oravel Stays.
The National Company Law Tribunal (NCLT) Ahmedabad Bench, had ordered a corporate insolvency resolution process (CIRP) against the hospitality unicorn Oyo subsidiary, Oyo Hotels and Homes Pvt. Ltd (OHHPL), for an amount of Rs 16 lakh.
The hotel owner (complainant) had approached the NCLT stating that in 2018 he had entered into a contract with OHHPL which granted the latter an exclusive license to operate the hotel under the 'Oyo Rooms' brand. It was further alleged that a demand notice was issued under the insolvency and bankruptcy code in November 2019.
Oyo had informed the NCLT that the business had been transferred from OHHPL to another entity Mypreferred Transformation and Hospitality Pvt. Ltd. However, the NCLT in its order has said that OHHPL had the liability to make payment of dues to the hotel owner, which was the operational creditor.
The tribunal ruled that operational debt is due to the applicant and called for a public announcement of the initiation of corporate insolvency resolution.
Ritesh Agarwal, Oyo founder and Chief Executive Officer (CEO) clarified on Twitter that a claimant was seeking Rs 16 lakh from Oyo's subsidiary, leading to a petition at the NCLT.
He mentioned in his tweet that "Oyo has paid that (amount) under protest and amount (is) already banked by the claimant. Oyo has also appealed with the NCLAT (National Company Law Appellate Tribunal) about the matter."
The Appellate Tribunal has admitted its plea against the insolvency order, and it has ordered a stay on the formation of a Committee of Creditors for Insolvency & Bankruptcy Code proceedings against the subsidiary.