New Delhi, Mar 3 – Shares of Coffee Day Enterprises Ltd (CDEL), the parent company of the popular Cafe Coffee Day chain, soared by 20% on Monday after the National Company Law Appellate Tribunal (NCLAT) ruled in favor of the company, setting aside the insolvency proceedings that had been initiated against it.
The stock of CDEL surged by 19.97% on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), reaching Rs 25.65 and Rs 25.53 per share, respectively. This marked a significant milestone, as the stock reached its 52-week high. Prior to this rally, CDEL shares had been restricted to lower circuit limits for four consecutive sessions.
Despite the positive momentum for Coffee Day Enterprises, broader market indices showed negative movement. The BSE Sensex dropped 360.20 points, or 0.49%, settling at 72,837.90, while the NSE Nifty fell by 103.05 points, or 0.47%, to 22,021.65.
The NCLAT's ruling came after a protracted legal battle involving the company. In a decision on Thursday, the Chennai bench of the NCLAT annulled the insolvency proceedings initiated by the Bengaluru bench of the National Company Law Tribunal (NCLT). The tribunal’s detailed ruling is still pending, but the immediate impact on CDEL’s stock price has been remarkable.
The company, which operates Cafe Coffee Day, a well-known coffeehouse chain in India, also owns a resort, offers consultancy services, and deals in coffee bean trade. Following the death of its founder, V G Siddhartha, in 2019, the company has faced significant financial difficulties and has been working to reduce its debt through asset sales.
In August 2024, IDBI Trusteeship Services Ltd (IDBITSL) filed a petition claiming that CDEL had defaulted on a Rs 228.45 crore debt. The NCLT admitted the petition, leading to the appointment of an interim resolution professional to oversee the company’s operations. However, the suspended board of CDEL immediately challenged the ruling, and on August 14, 2024, the NCLAT stayed the insolvency proceedings.
Despite multiple delays and a Supreme Court order, which required the NCLAT to dispose of the appeal by February 21, 2025, the appellate tribunal failed to meet the deadline. The Supreme Court had also stated that if the appeal was not disposed of by the specified date, the order by the appellate tribunal would automatically be vacated.
The latest decision by NCLAT to annul the insolvency proceedings has been a significant turning point for Coffee Day Enterprises, which continues its efforts to resolve its financial challenges.
Last updated by a enewsx: