Coffee Day Global Dodges Insolvency After Settlement With Lender

Cafe Coffee Day chain owner Coffee Day Global Ltd. dodged the insolvency bullet after the company and its lender IndusInd Bank reached a settlement in the matter.

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) today allowed the withdrawal of Coffee Day Global’s appeal after both parties informed about the settlement.

The oral order was passed by the division bench of Justice M. Venugopal and Technical Member Shreesha Merla.

IndusInd Bank decided to withdraw its insolvency petition against Coffee Day Global after the private sector lender assigned its loans to asset reconstruction company ASREC (India) Ltd.

The National Company Law Tribunal (NCLT) had admitted Coffee Day Global for insolvency resolution in July following a petition by IndusInd Bank.

The lender sought initiation of a corporate insolvency resolution process against Coffee Day Global, claiming a default of over 94 crore rupees ($11 million) as on 30 April 2020.

The NCLT had also appointed Shailendra Ajmera as the company’s interim resolution professional and directed him to take necessary steps mandated in the bankruptcy law for the insolvency resolution.

Meanwhile, Coffee Day Global’s promoter Malavika Hegde approached the bankruptcy appellate tribunal, challenging the NCLT’s order, and also initiated talks with the bank for an out-of-court settlement.

The NCLAT later stayed the NCLT’s insolvency order against the company.

Advocate Pawan Jhabakh appeared for Coffee Day Global, while lawyer Chitra Nirmala appeared on behalf of the lender in the case.

Meanwhile, Coffee Day Global’s parent Coffee Day Enterprises Ltd. is staring at insolvency over alleged default of 228.46 crore rupees. IDBI Trusteeship Services Ltd. has filed an application against the company before the NCLT for the alleged default.

The first Cafe Coffee Day outlet, popularly known as CCD, was opened in 1996 in the southern Indian city of Bengaluru. The outlet has now presence across more than 200 cities in the country.

Note: $1 = 82.8281 Indian rupees

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