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Hyderabad based Hospitality Firm Drags Oyo to NCLT: Report

Conclave Infratech, a hospitality firm headquartered in Hyderabad, has moved an insolvency application in National Company Law Tribunal’s (NCLT) Ahmedabad chapter against Oravel Stays – the parent company of Oyo Rooms.

Image Source: Ritesh Agarwal’s official Twitter handle

According to Economic Times (ET), Conclave Infratech has moved the insolvency application citing breach of contract by Oyo.        

Conclave Infratech, owner of The Conclave hotel in Hyderabad, was being managed by Oyo Rooms under the mutually agreed contract arrangement.

As per the contract – cited by Conclave Infratech – the corporate debtor (Oyo Rooms) is liable to pay to the corporate creditor (Conclave Infratech) an assured benchmark revenue of Rs 12,96,000 every month regardless of bookings.

Conclave Infratech’s in its NCLT petition, which has been viewed by ET, claims in its application that it has received minimum guarantee payment only for two months between 2018 and May 2019. Barring these two months, the paid amount was way less than the minimum guaranteed revenue.

According to the insolvency petition, Oyo’s outstanding due is nearly around Rs 82.50 Lakh. ET claims that Oyo has already been served with demand notice on this issue.

Oyo has said that efforts for amicable resolution of the dispute is currently underway and is committed to the best outcome possible.  However, the Gurgaon based company has simultaneously disputed the liability and claimed that the petition does not stand the test of legality in NCLT.

Oyo has been having a rough time with many of its hotel partners over the last few years, with the latter reputedly accusing the company of non-payment of dues.

Overall, the recent months have not been too good for the SoftBank backed company. From massive layoffs to widening losses, the unicorn startup has had a rough patch in recent times.

With the eye on the IPO, Oyo will have to rise up to the challenge of containing the growing discontent among its hotel partners.

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