Mumbai, February 28, 2025: Coffee Day Enterprises Ltd. (CDEL), listed as COFFEEDAY (NSE) and 539436 (BSE), announced today that the National Company Law Appellate Tribunal (NCLAT), Chennai, has allowed the appeal filed by the company, effectively setting aside the Corporate Insolvency Resolution Process (CIRP) initiated against it by the National Company Law Tribunal (NCLT), Bengaluru.
The order, originally passed by NCLT Bengaluru on August 8, 2024, had initiated insolvency proceedings against Coffee Day Enterprises following an application by IDBI Trusteeship Services Ltd., representing debenture holders. NCLT had cited an admitted debt default related to non-convertible debentures (NCDs) worth INR 200 crore issued privately by Coffee Day Enterprises in March 2019.
The legal dispute arose after IDBI Trusteeship Services Ltd. moved to invoke pledged shares of Coffee Day Global Ltd., a subsidiary of CDEL holding a significant portion of the group's coffee outlets. IDBI Trusteeship subsequently filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, in September 2023, claiming unpaid dues exceeding INR 278 crore.
The NCLAT judgment concluded that the proceedings initiated by IDBI Trusteeship were procedurally flawed, emphasizing that the initiation lacked proper authority under the Debenture Trust Deed and did not comply with stipulated provisions requiring a majority decision of debenture holders. Further, the tribunal held the proceedings were barred by limitation, as the original date of default, acknowledged as September 30, 2019, was outside the permissible window to initiate legal proceedings.
The decision provides significant relief to Coffee Day Enterprises, which has been navigating financial restructuring and business recovery following the passing of its founder V.G. Siddhartha and operational disruptions during the COVID-19 pandemic.
Commenting on the outcome, the management of Coffee Day Enterprises expressed optimism, stating, "This ruling strengthens our resolve to stabilize and grow the Cafe Coffee Day brand. It removes a significant legal overhang, allowing the company to focus more clearly on strategic initiatives and operational recovery."
The company's stock reacted positively to the announcement, reflecting investor confidence boosted by this favorable legal development.
Coffee Day Enterprises continues to engage actively with its creditors and stakeholders to ensure the long-term viability and growth of the business.
