Coffee Day gets reprieve as NCLAT halts insolvency for now
The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) has temporarily halted corporate insolvency resolution proceedings against Coffee Day Enterprises. This decision comes after an appeal by Malvika Hegde, a shareholder and director of the company. Hegde challenged an earlier order from the National Company Law Tribunal (NCLT), which had approved IDBI Trusteeship's request to initiate insolvency proceedings against the firm.
IDBI Trusteeship sought insolvency proceedings over alleged default
In September 2023, IDBI Trusteeship approached the Bengaluru bench of NCLT to initiate insolvency proceedings against Coffee Day Enterprises. This action was taken due to an alleged default of ₹228 crore by the company. On August 9, Coffee Day Enterprises informed exchanges through a filing that it was considering legal action in response to this development.
IndusInd Bank withdrew its insolvency application
In a related development, IndusInd Bank had also filed an insolvency application against Coffee Day Enterprises in September 2023. However, the bank later informed NCLT that it had reached an amicable settlement with the company and withdrew its insolvency application. The bank stated that the debt in question was sold to ASREC (India) Ltd., an asset reconstruction company. A joint settlement application was subsequently filed by both parties in this matter.
NCLAT set aside previous insolvency resolution order
The Chennai bench of NCLAT also set aside a previous NCLT order from July 20, which had permitted the initiation of an insolvency resolution against Coffee Day Global Ltd. During that period, Shailendra Ajmera was appointed as the company's interim resolution professional to manage its daily operations. Following these developments, shares of Coffee Day Enterprises saw a rise on Wednesday, trading at ₹36.75 on the National Stock Exchange (NSE), marking a 5% increase from their previous close.
