Gurugram-based hotelier Rakesh K Yadav, who filed a plea with the The National Company Law Tribunal against a unit of hospitality firm Oyo, has withdrawn the case after resolving issues with the company.
“After open discussion with teams from Oyo and its subsidiaries, I fully withdraw the case and confirm that all issues are resolved. I also acknowledge the receipt of Rs 16 lakh under the MSA (master service agreement) with MTH. I have observed in my interactions that Oyo and its employees are always committed to professional conduct and business practices. I am thankful for Oyo's innovative business model and technology that has enabled the growth of small and medium hotels of India,” Yadav said.
On Apr 1, 2021, IBC proceedings started for Oyo's subsidiary OHHPL due to a case led by Yadav at NCLT Ahmedabad. Oyo had argued that the petition should have been filed against its unit My Preferred Transformation and Hospitality Private Ltd (MTH).
MTH and Yadav subsequently considered a mutual resolution, and reached a settlement. Yadav has filed for the withdrawal of the IBC case against OYO subsidiary OHHPL.
On April 1, the Insolvency and Bankruptcy Code began proceedings against a unit of Oyo Rooms for insolvency of its unit Oyo Hotels and Homes Pvt Limited (OHHPL). This was filed by Yadav at NCLT Ahmedabad, and he claimed that OHHPL defaulted on a payment of Rs 16 lakh. Oravel Stays Pvt Limited, the parent company of Oyo Rooms, had challenged the NCLT order, which initiated insolvency proceedings against OHHPL.
The matter was later heard at National Company Law Appellate Tribunal, after Oyo paid the disputed amount of Rs 16 lakh claimed by Yadav.
Responding to a request for comment, Oyo confirmed the development.
“The IBC case regarding Oyo's subsidiary OHHPL in NCLT Ahmedabad is fully resolved and withdrawal application is filed. Further, my client acknowledges the receipt of Rs 16 lakhs. The interveners, in my view, should separately pursue appropriate legal proceedings to recover any alleged dues they may have against Oyo. Raising such unsubstantiated claims in the present proceedings is causing undue delay and imposition of harsh financial costs on our client,” said Srinivas Kotni, of corporate law firm LEXport, and Yadav's legal counsel.
Ahmedabad-based Keyur Jagdishbhai Shah, who is part of corporate legal advisory firm Keyur J. Shah & Associates, had been appointed as the interim resolution professional for the case.
Oyo, like other companies in the hospitality space, was hit hard by the pandemic related lockdowns last year.
In a recent interview to a financial daily, CEO Riteish Agarwal said gross margins at the SoftBank-backed firm have climbed back to pre-pandemic levels this year. In India, it is now focusing on profitable geographies and the return of the small business traveller, he said.