© Reuters.
Coffee Day Global Ltd (CDGL), the company that owns and operates the Cafe Coffee Day chain, and its financial creditor, IndusInd Bank, have reached a settlement over insolvency litigations. The National Company Law Appellate Tribunal (NCLAT) was informed about the settlement on Wednesday by the counsel representing both parties. Subsequently, a two-member bench consisting of Justice M Venugopal and Shreesha Merla set aside the order admitting CDGL to insolvency.
The dispute began when IndusInd Bank, one of the financial creditors of CDGL, approached the National Company Law Tribunal (NCLT) over a default of ₹94 crore ($12.5 million). In response to the bank’s plea, NCLT issued an order on July 20, 2023, admitting the plea and ordering insolvency against CDGL. Shailendra Ajmera was appointed as the interim resolution professional to manage the company’s day-to-day affairs.
However, CDGL contested this order, leading to its stay by NCLAT through an interim order issued on August 11, 2023. The appeal was filed by Malavika Hegde, Director of CDGL and wife of late VG Siddhartha.
The recent settlement between IndusInd Bank and CDGL involved the assignment of debt to ASREC (India) Ltd, an asset reconstruction company. A senior counsel from Skanda Legal, the firm representing IndusInd Bank in this case, confirmed that “Coffee Day has settled the entire debt to IndusInd by way of assignment of debt to ARSEC ARC.” Following this announcement, CDGL’s stock hit the upper circuit of 20% on Wednesday.
Meanwhile, Coffee Day Enterprises Ltd (CDEL), the parent company of CDGL, is facing a separate insolvency claim from IDBI Trusteeship over an alleged default of ₹228 crore ($30.3 million). This plea was filed on Friday with the Bengaluru bench of NCLT. In response to this development, CDEL stated that it is “seeking appropriate legal advice and will take all appropriate steps to protect its interest in the matter.”
CDEL has been grappling with financial issues since the death of its founder Chairman V G Siddhartha in July 2019. The company has been reducing its debt through asset resolutions and has significantly lowered it since the start of its financial troubles.
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