NCLAT Stalls Withdrawal Of Oyo’s insolvency; Allows FHRAI To Intervene On Behalf Of Hotels

In the latest hearing of the Oyo Insolvency case before the National Company Law Appellate Tribunal (NCLAT), the Tribunal has allowed the intervention of the Federation of Hotel & Restaurant Associations of India’s (FHRAI) on behalf of hotels. The FHRAI has intervened on behalf of its member hotels that are operational creditors who are suffering hugely on account of non-payment of debt by Oyo. FHRAI members have filed claims before the IRP of around Rs.93 crores and the Association expects more hotels to submit their claims before the next hearing on June 21, 2021. 

FHRAI's Senior Counsel Kishnendu Datta represents FHRAI and Rs.93 crores of claimants that are FHRAI’s member hotels. There is close to Rs.200 crores worth of claims by claimants overall in the Oyo insolvency case with the NCLAT. Hotels have stated that Oyo entered into various kinds of agreements ranging from leave and license agreements to Management Services Agreement with minimum return assurances but Oyo eventually breached the terms of the agreements.

“There is an insolvency case against Oyo which is going on. Over the last couple of years, a lot of our members have reported to us about money owed to them and Oyo refusing to pay them. The FHRAI has pleaded to contest the case on behalf of its hotel members and the Hon’ble Tribunal has allowed it. We are representing many distressed hoteliers who individually do not have the capacity to take on Oyo single-handedly. We are glad that the Hon’ble Tribunal has allowed our intervening in the matter,” says Mr Pradeep Shetty, Jt. Honorary Secretary, FHRAI.

In its application to the Tribunal, the FHRAI has pointed out that a number of matters by several hoteliers are pending before various Courts against Oyo. Oyo has closed a majority of its operations and offices across India to further cheat member hotels and other similarly placed companies.

“Oyo operates its business under a maze of more than a dozen subsidiary entities. These entities enter into agreements with hotels and the FHRAI has data of hundreds of such hotels that have reported payment defaults and other unethical business practices by Oyo through these entities. The development so far in the case has given a sense of relief to several hotels across the country who felt short-changed by Oyo and the movement of consolidation of all victims of the hotel room aggregator is now gaining steam,” concludes Mr. Shetty.

About Federation of Hotel & Restaurant Associations of India (FHRAI):

The Federation of Hotel & Restaurant Associations of India (FHRAI) is the apex body of the Indian Hospitality industry. Founded in 1955, the association has diligently built on its rich legacy and is today privileged to serve as the leading voice of hotel and restaurant industry and plays a seminal role in supporting the growth trajectory of India's hospitality and tourism sector. FHRAI provides a vibrant interface between the industry, government, regulatory bodies, academia, international organizations, civil society and the media.