Insolvency Proceedings
NCLAT sets aside insolvency proceedings against Coffee Day Enterprises
This story was originally published at 11:20 IST on 27 February 2025
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--NCLAT sets aside insolvency proceedings against Coffee Day Enterprises
By Surya Tripathi
NEW DELHI – The Chennai bench of the National Company Law Appellate Tribunal Thursday set aside insolvency proceedings against Coffee Day Enterprises Ltd. "Appeal (by Coffee Day Enterprises) is allowed. The impugned judgment dated Aug. 8., 2024 is hereby quashed," said the appellate tribunal.
In August, the Bengaluru bench of the National Company Law Tribunal had admitted a petition by IDBI Trusteeship Services Ltd. to start insolvency proceedings against Coffee Day Enterprises for total outstanding debt of INR 2.28 billion. The tribunal had appointed Ashish Chhawchharia as the interim resolution professional of Coffee Day to carry out its functions as per the Insolvency and Bankruptcy Code, 2016.
In 2018, 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, IDBI Trusteeship submitted its application to subscribe to 1,000 non-convertible debentures in the private placement issue and paid INR 1 billion towards its subscription.
Coffee Day agreed to pay IDBI Trusteeship certain amounts in accordance with the terms of the debenture trust deed. However, in 2019, Coffee Day defaulted on payment to IDBI Trusteeship. Consequently, IDBI Trusteeship moved the Bengaluru tribunal to start insolvency proceedings against Coffee Day. Challenging admission of insolvency proceedings, Malavika Hegde, a shareholder and director of Coffee Day Enterprises moved the appellate tribubnal.
At 1055 IST, the shares of Coffee Day Enterprises Ltd. were down 5% at INR 21.28 on the National Stock Exchange. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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