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False alarm

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Unless evidence surfaces that it really can’t stay afloat, there’s no cause for alarm over its survival

Rumours swirled on Wednesday of Oyo going in for bankruptcy after the National Company Law Tribunal (NCLT) ordered insolvency proceedings against Oyo Hotels and Homes Pvt Ltd, a unit of the hospitality unicorn. Oyo’s founder Ritesh Agarwal tweeted saying that not only was the business fine, the order was related to a 16 lakh payment dispute of a subsidiary with a supplier, a sum he claimed had been paid “under protest", even as it filed an appeal against the directive with the appellate tribunal.

While Oyo’s business of space rental has taken a covid blow over the past year, there’s little to suggest it has gone bust. Our bankruptcy code, however, allows an operational creditor to drag a company to the NCLT for insolvency resolution over unpaid dues. This has led many companies to suffer the ignominy of hitting social media circuits with premature reports of their inability to cough up what they owe, setting off waves of panic among employees and other creditors. In this case, it’s now for the appellate body to weigh the supplier’s claims against Oyo’s. Unless evidence surfaces that it really can’t stay afloat, there’s no cause for alarm over its survival.

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