FHRAI affiliated hotels require non-payment of 72 Cr INR fees
According to the FHRAI, the total claims registered with IRP against OYO are 200 Cr INR
Conclave Infratech filed for bankruptcy against the OYO subsidiary last month
The National Company Law Appellate Tribunal (NCLAT) has allowed the Indian Federation of Hotel and Restaurant Associations (FHRAI) to intervene in the bankruptcy case of the OYO subsidiary budget hotel chain giant on behalf of its member hotels that have not yet been paid by INR 72 Cr. The FHRAI has to make its oral statements on June 2nd, 2021 before the bankruptcy court.
“The FHRAI has received several complaints from member hotels about OYO’s failure to pay debts for years. The FHRAI is currently filing the application with NCLAT on behalf of aggrieved hotels and restaurants across India who have filed their claims with the Insolvency Resolution Professional (IRP). “Gurbaxish Singh Kohli, Vice President of FHRAI, said.
The total claims registered with IRP against OYO amount to 200 Cr INR, the association added. It was further stated that OYO has violated the provisions of various types of agreements, including vacation and license agreements, management service agreements, and minimum rate of return.
“OYO runs its business in a maze of more than a dozen subsidiaries that have agreements with hotels. FHRAI has data from hundreds of such hotels that have reported defaults and other unethical business practices by OYO, ”said FHRAI’s Secretary Pradeep Shetty. The OYO spokesman denied these claims, saying, “This is in line with the unfounded and negative propaganda of the FHRAI to mislead the small hoteliers of this country.”
Conclave Infratech, which operates a hotel chain in Hyderabad, filed for bankruptcy against the OYO subsidiary on April 1 of this year at the National Company Law Tribunal (NCLT). The disputed amount originally claimed by Conclave Infratech was INR 16 lakh, which OYO claims to have already paid. However, in bankruptcy proceedings, OYO’s creditors filed for claims worth INR 160 Cr from April 19, 2021. Now the FHRAI claims that the claims to INR 200 Cr have grown.
The NCLT agreed to be heard on the bankruptcy petition on April 7th and appointed an IRP to lead the proceedings on behalf of OYO. However, on April 8, OYO requested a stay of the proceedings, whereupon NCLAT ordered a partial stay.
According to the Indian Bankruptcy and Insolvency Act 2016, the Code of Conduct (CoC) is formed and empowered to decide on the regular functioning of the company, i.e. the debtor, during the bankruptcy settlement process. Any creditor can bankrupt a company for unpaid fees. Once a petition has been approved by the NCLT, a resolution specialist is appointed to review the creditors’ claims and, if necessary, oversee the settlement of the claims.
In an April 17 statement, OYO stated that only one creditor had sought a settlement of 160 Cr INR, although the facts regarding the number of creditors who filed claims have not yet been disclosed by the tribunal.
“We have been informed that in response to the public announcement, unverified claims will also be directed in large quantities to the Interim Resolution Professional (IRP). An example of such an unverified and exaggerated claim is INR 50 Cr from a single reputational claimant. This particular claim is already in legal proceedings (the name will not be disclosed for confidentiality reasons), ”said OYO’s previous statement.
