OYO relieved after NCLAT stays insolvency proceedings

OYO relieved after NCLAT stays insolvency proceedings
Photo Credit: VCCircle
9 Apr, 2021

The National Company Law Appellate Tribunal (NCLAT) on Thursday stayed the order of National Company Law Tribunal (NCLT) for the formation of the committee of creditors (COC) in the insolvency and bankruptcy proceedings against Oravel Stays subsidiary OYO Hotels and Homes. 

The announcement came a day after a notice from NCLT’s Ahmedabad bench passed on April 1 calling for the corporate insolvency resolution proceedings (CIRP) against the company started circulating on social media. While the NCLT order was in relation to an application filed by an unnamed claimant regarding non-payment of dues worth Rs 16 lakh, misinformation started circulating on social media about the parent company Oravel Stays allegedly filing for bankruptcy. 

The claimant is an individual hotel owner and not a company, a source privy to the development told TechCircle.  

“The NCLAT provided a stay for the formation of COC in IBC proceedings against OHHPL, subsidiary of OYO. OHHPL appealed the order in front of NCLAT and explained that a demand draft of INR 16L was issued to the claimant under protest and the claimant has willingly banked the DD,” a company spokesperson said in a statement issued after the order was passed.  

In a Twitter post, founder and group CEO, Ritesh Agarwal thanked his supporters. “I am so grateful to everyone for their support on social media since yesterday. Thank you for discouraging misleading news and forwarded msgs,” he wrote. 

On April 7, the company took to Twitter to clarify speculations on bankruptcy.  

“There is a PDF and text message circulating that claims OYO has filed for bankruptcy. This is absolutely untrue and inaccurate. A claimant is seeking INR 16Lakhs (USD 22k) from OYO's subsidiary leading to a petition at NCLT,” Agarwal said adding, “OYO has paid that under protest and amount already banked by the claimant.”