On Tuesday this week, several news stories claimed that Indian hospitality chain Oyo had filed for bankruptcy and that the National Company Law Appellate Tribunal (NCLAT) had ordered a corporate insolvency resolution process of the company. On Wednesday, however, OYO Hotels CEO Ritesh Agarwal clarified that the company had not filed for bankruptcy but admitted that and NCLAT petition had indeed been filed.
Is OYO bankrupt?
The answer is no, as company CEO Ritesh Agarwal clarified in a tweet. “There is a PDF and text message circulating that claims OYO has filed for bankruptcy. This is absolutely untrue and inaccurate,” Agarwal wrote. The clarification came after several news reports, social media posts and forwarded messages claimed that the company was filing for bankruptcy under IBC 2016.
What is the NCLAT corporate insolvency order?
NCLT, Ahmedabad, has indeed initiated corporate insolvency proceeding of OYO Hotels based on a petition by a hotel owner over a Rs 16 lakh payment dispute with the company. According to a report in Bloomberg Quint, the NCLAT permitted the petition filed by Rakesh Yadav, who owns the Gurgugram-based hotel Yellow White Residency, as it met the criterion under the Insolvency and Bankruptcy Code required for an operational creditor to initiate an insolvency petition. Yadav has filed a petition with the NCLAT over non-payment of a Rs 16 lakh debt to be paid by OYO, which was managing Yadav’s 22-room hotel in Gurugram under its banner.
OYO has paid that under protest and amount already banked by the claimant. OYO has also appealed with the NCLAT about the matter. OYO is recovering from the pandemic steadily and our largest markets are operating profitably. 2/3— Ritesh Agarwal (@riteshagar) April 7, 2021
What does OYO say about the dispute?
OYO founder and CEO Agarwal addressed the issue in his tweets. “A claimant is seeking INR 16Lakhs (USD 22k) from OYO’s subsidiary leading to a petition at NCLT,” Agarwal said. “OYO has paid that under protest and amount already banked by the claimant,” he added. In a statement released by the company, OYO informed that it had challenged the NCLAT order and also cited an example of a similar instance in Flipkart when the case had been set aside.