NCLT Admits Insolvency Plea Against Coffee Day Global
The National Company Law Tribunal (NCLT), Bengaluru bench, has admitted a plea against Coffee Day Global Ltd (CDGL), which owns and operates popular chain Cafe Coffee Day, for initiating Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.
The NCLT passed an order over a plea filed by a financial creditor of the company, claiming dues worth of Rs. 94 crores from Coffee Day Enterprises Ltd (CDEL), CDGL’s parent company.
The company in a regulatory filing said, “The application filed by one of the lenders against the material subsidiary CDGL before NCLT, Bengaluru, has been admitted (oral order) under Section 7 of Insolvency and Bankruptcy Code, 2016 for initiating CIRP for Rs. 94 crores.” However, the CDGL is waiting for the written order from the NCLT.
Further, the material subsidiary has informed the company that, it will take the required legal action in this regard.
In 2022-23, CDGL’s consolidated total income was Rs. 920.41 crores. It had reported a loss of Rs. 67.77 crores in the year. As per the annual report of CDEL for Financial Year 22, CDGL owns 495 cafes in 158 cities and 285 Café Coffee Day (CCD) Value Express kiosks.
There are 38,810 vending machines that dispense coffee in corporate workplaces and hotels under the brand.
Coffee Day Enterprises has been facing various hurdles after the death of founder Chairman V G Siddhartha in July 2019. Through asset resolutions, it is reducing its obligations to a far less extent than when the problems first began.
In March 2020, CDEL announced that it would be repaying Rs. 1,644 crores to 13 lenders after concluding a deal with Blackstone Group to sell its technology business park.
Additionally, earlier this year, the capital markets regulator Securities and Exchange Board of India (SEBI) had also levied a penalty of Rs. 26 crores on CDEL for failing to stop the diversion of Rs. 3,535 crores from the company’s subsidiary Mysore Amalgamated Coffee Estates Ltd (MACEL), which is an entity related to promoters.
CDEL has been employing various methods to recover the amount legally from MACEL.