ZO Rooms files petition to make OYO subsidiaries party to ongoing arbitration

ZO Rooms files petition to make OYO subsidiaries party to ongoing arbitration
Photo Credit: VCCircle
28 Jan, 2020

As budget hospitality chain OYO completed the restructuring of its business for a debt round of funding in 2019, the arbitration between ZO Rooms and OYO has resurfaced.

On January 21, ZO Rooms filed a petition in the Delhi High Court, asking Oravel Stays Singapore and Alcott Town Planners to be made a party to an ongoing arbitration between it and holding company of OYO, Oravel Stays incorporated in India. 

In July, OYO had hived off its business into three entities — Oravel Stays Singapore which houses the international business of the chain in China and US, Oravel Stays, which focusses on the OYO brand and technology functions across verticals and Alcott Town Planners, an arm responsible for all India business dealings for OYO including events, wedding venues among others. 

Oravel Stays granted mirror shares in Alcott Town Planners for each share held on par value as per the filings. 

ZO Rooms has contested that not making the subsidiary companies respondents to the ongoing arbitration will see a loss of value. Post the merger, proprietors of ZO Rooms were to be allotted 7% equity shares in Oravel Stays. With the demerger, ZO Rooms has stated it is worried about the loss of value if the arbitration is decided in favour of it. 

The development was first reported by The Times of India.

In 2015, OYO had committed to acquiring the business of ZO Rooms, announcing the acquisition in 2016. However, the deal did not materialise and the parties have been stuck in a long-drawn arbitration since 2018.

While the court quashed ZO Room’s charges against OYO which accused the SoftBank backed company of stealing employee data in 2018, the companies have been suing each other on various charges.