Bankruptcy for OYO? Check out the facts

In a surprising development, several sites reported on Tuesday (6th April) that OYO had filed for bankruptcy under IBC 2016, and that the NCLT had instructed the initiation of a corporate insolvency resolution process for OYO Hotels and Homes Private Limited.

However, Ritesh Agarwal, the founder and CEO of OYO, has denied claims that the company has declared bankruptcy, calling the reports "false." "A PDF and text message are circulating stating that OYO has declared bankruptcy. This is completely false and misleading. An applicant is suing OYO's subsidiary for INR 16 lakhs (USD 22 thousand), prompting a petition to the NCLT "He claimed this in a series of tweets.

There is a PDF and text message circulating that claims OYO has filed for bankruptcy. This is absolutely untrue and inaccurate. A claimant is seeking INR 16Lakhs (USD 22k) from OYO's subsidiary leading to a petition at NCLT. 1/3

— Ritesh Agarwal (@riteshagar) April 7, 2021

"OYO has charged that under protest, as well as the amount already deposited by the claimant. OYO has also filed an appeal with the NCLAT. OYO is slowly recovering from the pandemic, and our largest markets are profitable "Agarwal continued.

3/3 pic.twitter.com/0Btp1aEpfP

— Ritesh Agarwal (@riteshagar) April 7, 2021

Previously, it was announced that the Ahmedabad branch of NCLT issued the corporate insolvency resolution procedure of Oyo Hotels and Homes on March 30.

When the pandemic struck, OYO, like other businesses at the time, resorted to furloughs, pay cuts and voluntary resignations. However, the company has recently stated that it is on the road to recovery and will be IPO-ready in February 2021.

In a recent letter to OYO Group employees, Founder and Group CEO Ritesh Agarwal said that the company is on track to recover 100% of its gross margins and achieve EBITDA breakeven in India. To offset the effects of declining sales, Oyo has concentrated on introducing software services for its vendors.

OYO Secure, a wallet service that allows property owners to upload amounts for commission and regular payment reconciliations, is one such example. Since March 2020, IBC has postponed new insolvency proceedings until March of this year. With a new collection of SOPs, the NCLT and the National Company Law Appellate Tribunal (NCLAT) held virtual hearings. The pandemic had delayed insolvency proceedings dramatically.