Lawstreet Journal

Tussle Between OYO and ZO Rooms; Restructuring Move by OYO Challenged by Zo Rooms; Petition filed in Delhi High Court

Lawstreet Journal 29 Jan 2020 4:31pm

Image courtesy: Lawstreet Journal Business Tussle Between OYO and ZO Rooms; Restructuring Move by OYO Challenged by Zo Rooms; Petition filed in Delhi High Court

The fight between ZO Rooms and OYO has taken a quick turn with a fresh plea filed in the Delhi High Court on January 21, 2020 against the ‘restructuring’ step taken by Zo Rooms SoftBank backed accommodation major.

Zo Rooms moved the Delhi High Court against the decision of OYO to restructure business and place them under new entities without consulting either the Arbitrator or Zo Rooms.

Further, the petition contends that this demerger will negatively affect the claim as sought by Zo with 7% stakes in OYO parent – ‘Oravel Stays’

The story began with the merger of Zo and Oravel Stays in 2015. M Ahmadi former Chief Justice of India is the arbitrator for the matter, following the sole directive of Supreme Court in October, 2018.

Zo has now made two new entities- Oyo Hotel and Homes, and Oravel Stays Singapore, a party to the arbitration. The Delhi High Court in its order dated 24 January, 2020 has asked Oyo to file a reply in 2 weeks’ time, this also implies that the 2 new entities shall be bound by the arbitral award, based on the final outcome of arbitration.

The real dispute was between Zo Rooms and Oravel Stays but the recent transfer of business by Oravel Stays to Oyo hotels and homes and Oravel stays Singapore will result in Zo losing out on the value of revenue as it has been shifted to others.

If we draw a raw calculation of valuing the Oravel Stay at $5 billion, a 7% stake would… Continue Reading...

Tagged: Oyo Rooms  
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