Coffee Day Global reportedly faces bankruptcy proceedings: What happened
Cafe Coffee Day (CCD) is known for pioneering India's cafe culture. It was once the country's largest cafe chain but has been through a lot in the past few years. Now, Coffee Day Global, the operator of the CCD chain, is reportedly facing a bankruptcy case in the National Company Law Tribunal (NCLT). The petition was filed by IndusInd Bank, reported Economic Times.
Why does this story matter?
CCD's struggles since the passing of its founder VG Siddhartha are well-documented. The company was under a mountain of debt when Siddhartha died by suicide in 2019. The group has taken a slew of measures to manage its debt and make the business profitable since then. However, the reported bankruptcy proceedings can potentially derail CCD's journey back to glory.
Negotiations between bank, CCD broke down
Coffee Day Global was admitted for bankruptcy by the Bengaluru bench of the NCLT, as per Economic Times. IndusInd Bank filed the petition before the tribunal after negotiations between the bank and the firm broke down. The tribunal reportedly passed an oral order admitting Coffee Day Global last week. Skanda Legal is the counsel for the bank, while Tatva Legal will represent CCD.
Company owes over Rs. 67 crore to IndusInd Bank
Coffee Day Global owed Rs. 67.3 crore to IndusInd Bank as of March 31, 2022, according to the company's annual report. The firm is a subsidiary of the listed Coffee Day Enterprises. Meanwhile, in the first quarter of FY23, Coffee Day Global's consolidated revenue from operations was Rs. 189.63 crore, more than double the figure in FY22. It also narrowed its losses.
CCD has cut store count by 73%
It is unclear what caused the negotiations between the parties to break down. Neither Coffee Day Global nor IndusInd Bank has said anything about bankruptcy proceedings. Coffee Day Enterprises has been trying to reduce its debt under the leadership of Malavika Hegde, Siddhartha's wife. In the last five years, the company has cut its footprint by 73%.
SEBI imposed Rs. 26cr penalty on Coffee Day Enterprises
Separately, in January 2023, the Securities and Exchange Board of India (SEBI) imposed Rs. 26 crore penalty on Coffee Day Enterprises for diverting funds from subsidiaries to a company related to promoters. Funds amounting to Rs. 3,535 crore were diverted from subsidiaries, the market regulator found. They were transferred to Mysore Amalgamated Coffee Estates Ltd. (MACEL), a firm almost entirely owned by Siddhartha's family.
