NCLAT dismisses insolvency proceedings against Coffee Day Enterprises
What's the story
The National Company Law Appellate Tribunal (NCLAT) has quashed the insolvency proceedings against Coffee Day Enterprises Ltd (CDEL), the parent company of Cafe Coffee Day.
The ruling came on a petition by Malavika Hegde, a shareholder and director at CDEL.
The petition challenged a previous National Company Law Tribunal (NCLT) order that had admitted IDBI Trusteeship's insolvency plea against CDEL over an alleged ₹228 crore default.
Timeline
NCLAT's interim relief and missed deadline
The NCLAT had earlier provided interim relief by staying the proceedings on August 14, 2024.
However, as it failed to pass a final order within the SC's deadline of February 21, 2025, the insolvency process was temporarily revived.
This came after IDBI Trusteeship Services Ltd (IDBITSL) moved the SC which then directed NCLAT to dispose of the pending appeal by February 21.
Case background
NCLAT's final order and case history
Eventually, the NCLAT issued its final order earlier today, dismissing the insolvency case against CDEL in its entirety.
The dispute started in September 2023 when IDBI Trusteeship approached the Bengaluru bench of the NCLT seeking insolvency proceedings against CDEL over unpaid dues.
This arose after CDEL defaulted on coupon payments for redeemable non-convertible debentures (NCDs) between September 2019 and June 2020.
Subsidiary dispute
Insolvency case against Coffee Day Global
At the same time, CDEL's subsidiary Coffee Day Global was battling another insolvency petition by IndusInd Bank over an alleged ₹94 crore default.
On July 20, 2024, the NCLT admitted Coffee Day Global to insolvency and appointed Shailendra Ajmera as the interim resolution professional to run the company's operations.
However, this was later amicably settled with IndusInd Bank withdrawing its insolvency application after transferring the debt to ASREC (India) Ltd., an asset reconstruction company.