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Informist, Friday, Aug 9, 2024

 

NEW DELHI – The Bengaluru bench of the National Company Law Tribunal has admitted a petition by IDBI Trusteeship Services Ltd to start insolvency proceedings against Coffee Day Enterprises Ltd for total outstanding default amount of 2.28 bln rupees. The tribunal appointed Ashish Chhawchharia as the interim resolution professional of Coffee Day to carry out its functions as per the Insolvency and Bankruptcy Code, 2016.

 

"...we are of the considered opinion that there is a 'debt' and 'default' existing in this case; and the petition is filed within the limitation period. The threshold requirement is also fulfilled," said the tribunal. "Hence the present petition CP (IB) No. 152 of 2023 is admitted and moratorium is declared in terms of Section 14 of the (Insolvency and Bankruptcy) Code," the tribunal added.

 

Coffee Day Enterprises is a business conglomerate based in Bangalore. Apart from running India's largest coffee chain, Cafe Coffee Day, the group has businesses in logistics, financial services, tech parks, hospitality and other things. The company has informed the National Stock Exchange that it was planning to take the required legal action in this regard.

 

Coffee Day had proposed to issue an aggregate of 2,000 unlisted, unrated, secured, redeemable non-convertible debentures of nominal value of 1 mln rupees each, aggregating to 2 bln rupees in not more than two tranches, through private placement. Thereafter, Coffee Day had entered into a debenture trust agreement agreeing to appoint the latter as the debenture trustee for the benefit of the debenture holders subscribing to non-convertible debenture.  

 

IDBI Trusteeship submitted its application to subscribe to 1,000 non-convertible debentures in the private placement issue and paid a sum aggregating to 1 bln rupees towards its subscription. Coffee Day covenanted to pay IDBI Trusteeship certain amounts in accordance with the terms of the debenture trust deed. However, Coffee Day defaulted on payment to IDBI Trusteeship. Consequently, IDBI Trusteeship moved the tribunal to start insolvency proceedings against Coffee Day.

 

Today, shares of Coffee Day Enterprises ended 5% lower at 46.60 rupees on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Aditya Sakorkar

 

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