The Federation of Hotel & Restaurant Associations of India (FHRAI) has been allowed to intervene on behalf of hotels by the National Company Law Appellate Tribunal (NCLAT) in the insolvency case against a subsidiary of OYO.
The total claims registered with Insolvency Resolution Professional (IRP) against OYO's subsidary are to the tune of Rs 200 crore.
Presently, the FHRAI filed the application on behalf of its member hotels in India, which are operational creditors and are suffering hugely on account of non-payment of debt by OYO's subsidiary.
Senior counsel Kishnendu Datta appeared for FHRAI intervening on behalf of its affected members for their outstanding of approximately Rs 72 crore.
The hotels claimed OYO entered into various kinds of agreements ranging from leave and license agreements to a management services agreement with minimum return assurances. However, the entity eventually breached the terms of the agreements.
“The FHRAI has been receiving several complaints from member hotels with respect to the non-payment of debts by OYO for years. The FHRAI has presently filed the application before the NCLAT on behalf of aggrieved hotels and restaurants across India who have filed their claims with the Insolvency Resolution Professional (IRP). Many are small standalone hotels that are fighting to survive in an extremely competitive market. At present hospitality business is badly affected due to the pandemic and the non-payment of the debts by OYO is causing extreme hardships to hotels. The development in the case has given a sense of relief to several hotels across the country who felt short changed by OYO's sudden change in their alignment and policy. It has brought them a new ray of hope with the possibility of recovering their rightful dues,” says Gurbaxish Singh Kohli, Vice President, FHRAI.
In its application to the tribunal, the association has also pointed out that a number of matters by several hoteliers are pending before various courts against OYO and its subsidaries. The hospitality entity 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 maze of more than a dozen subsidiary entities that have agreements with hotels. FHRAI has data of hundreds of such hotels that have reported payment defaults and other unethical business practices by OYO. The FHRAI has also filed a case in the CCI against OYO for anticompetitive practices and cartelization, which is presently under investigation. The systemic depredation of the budget segment hotel business and its market as a means to achieve notional billion-dollar valuation for OTAs is a serious cause of concern for FHRAI,” concluded Pradeep Shetty, joint secretary, FHRAI.