The National Company Law Appellate Tribunal (NCLAT) has allowed the Federation of Hotel & Restaurant Associations of India (FHRAI) to intervene on behalf of its member hotels in the Oyo subsidiary's insolvency case.
The bankruptcy court has permitted FHRAI to make its oral submissions on June 2. The association is intervening on behalf of its affected members over an outstanding of approximately Rs 72 crore, the FHRAI said in a statement.
"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)," FHRAI Vice President said Gurbaxish Singh Kohli said.
The association said Oyo breached the terms of various kinds of agreements it had signed with hotels. The FHRAI said agreements ranged from leave and license agreements to management services agreements, with minimum return assurances.
Also read: NCLAT hears Oyo subsidiary's case on May 4 -- Here's all you need to know about the issue so far
NCLAT is hearing a challenge by Softbank-backed Oyo’s subsidiary Oyo Hotels and Homes Pvt Ltd (OHHPL) to an NCLT’s order of insolvency proceedings against it.
Meanwhile, Oyo issued a statement saying that the applications seeking to intervene in the appeal are yet to be heard and that FHRAI has no locus standi whatsoever.
"Kindly note that the applications seeking to intervene in the appeal are yet to be heard, let alone being allowed and do not have any merit. The Hon'ble NCLAT also did not allow any written submissions to be filed by any intervener except only to make an oral submission to show why they should be allowed to intervene at all. FHRAI has no locus standi whatsoever," said Jeevan Bhalla Panda, Oyo's counsel.
The insolvency proceedings were launched when a Gurugram hotelier, Rakesh Yadav, accused OHHPL of defaulting on payments and violating an agreement that required it to operate and maintain the hotel under the brand Oyo.
NCLT appointed advocate Keyur Jagdishbhai Shah as the interim resolution professional (IRP) and also asked other creditors of the company to submit their claims as well, in keeping with the insolvency code.
In April, the NCLAT had halted the formation of a Committee of Creditors, following an appeal OHHPL, which said a demand draft of Rs 16 lakh, the pending amount claimed by Yadav, was issued to him under protest. Oyo also submitted that it had settled the case with Yadav but he continued to object.
According to media reports, Shah is learnt to have told the court during a hearing on April 16 that he received claims worth more than Rs 160 crore against Oyo's subsidiary.
A creditor who is owed more than Rs 1 crore can take a company to NCLT for insolvency proceedings, legal experts say . If the tribunal is convinced, it initiates the proceedings with the appointment of an IRP, who is Shah in this case.
IRP issues a public notice inviting all creditors of the company, financial or operational, to submit their claims. It makes a list of all claims that are admissible.
Before taking the proceedings forward, IRP and the court will give an opportunity to Oyo to settle with the creditors.