NCLAT terminates insolvency proceedings against Coffee Day, sets aside NCLT order

Coffee Day Enterprises Ltd, which operates the Cafe Coffee Day outlets, said that the Chennai bench of the National Company Law Appellate Tribunal has terminated the Corporate Insolvency Resolution Process (CIRP) against the company and set aside the NCLT order.

In August, the Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) had stayed the admission of the corporate insolvency case brought by NCLT Bengaluru against the coffee chain firm.

Malavika Hegde, the suspended Director of CDGL, has approached the Chennai bench of NCLAT against the NCLT order to initiate the CIRP against Coffee Day Global.

Earlier, Coffee Day Enterprises said the Bengaluru bench of the NCLT passed an order over a plea brought by a financial creditor of the business who sought payment of Rs 94 crore in unpaid debts.

On July 20, the Bengaluru bench of the NCLT passed an order over a plea filed by IndusInd Bank, a financial creditor of the company, claiming dues of Rs 94 crore.

The NCLT had also appointed Shailendra Ajmera as the interim resolution professional after suspending the board.

"This is with reference to the disclosure submitted to the exchanges on July 24, 2023, and August 11, 2023, with respect to the NCLT order dated July 20, 2023, on admission and initiation of CIRP against Coffee Day Global. The said NCLT order was appealed before NCLAT (Chennai). The NCLAT has issued an order dated August 11, 2023, granting stay against the NCLT order," the company stated in a BSE filing on September 13.

"In respect to the NCLT order, the lender has assigned its loan of Coffee Day Global to Asset Reconstruction Company (ARC) and filed a joint memo to set aside the NCLT order with NCLAT, Chennai," it further mentioned.

Following this, shares of Coffee Day Enterprises Ltd rose by 20 per cent in Wednesday's trade.

Coffee Day Enterprises has been struggling since the death of its founder Chairman V G Siddhartha in July 2019. It is paring its debts through asset resolutions and has significantly cut it down since the troubles started.

Last week, Coffee Day Enterprises said on Friday that an application has been filed at NCLT against the company under Section 7 of the Insolvency and Bankruptcy Code.

The application has been filed by IDBI Trusteeship Services before National Company Law Tribunal, Bengaluru for the alleged default of Rs 228 crore.

As per the annual report of its parent firm Coffee Day Enterprises Ltd for FY22, CDGL owns 495 cafes in 158 cities and 285 CCD Value Express kiosks. There are 38,810 vending machines that dispense coffee in corporate workplaces and hotels under the brand.

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