The National Company Law Tribunal (NCLT) has ordered initiating insolvency proceedings against this leading coffee brand, over a default of Rs.228 crore according to a petition filed by IDBI Trusteehip Services Ltd.
Following the announcement, Coffee Day Enterprises Ltd’s (CDEL) share price dropped by 19.5 percent, reaching an intra-day low of Rs.37.55 per share in Monday’s trading session. The significant decline reflects investor concerns over the company’s financial stability
What happened
On August 8, the Bengaluru National Company Law Tribunal ordered insolvency proceedings against Coffee Day Enterprises Ltd (CDEL) after accepting a petition from IDBI Trusteeship Services Ltd (IDBITSL), which claimed CDEL defaulted on Rs.228.45 crore.
Coffee Day Enterprises Ltd, which also owns and operates a resort, and trades in coffee beans, defaulted on coupon payments for its redeemable non-convertible debentures (NCDs).
CDEL defaulted on payments for Rs.100 crore worth of debentures bought by IDBI Trusteeship Services Ltd in March 2019. CDEL opposed the insolvency proceedings, arguing that IDBITSL wasn’t authorized to initiate them. However, the NCLT rejected this, noting that CDEL had acknowledged a Rs.14.24 crore interest default in its annual reports and approved initiating insolvency proceedings.
Additionally, Coffee Day Enterprises Ltd has reported a total default of Rs 433.91 crore on payments of interest and repayment of principal amount on loans from banks, financial institutions, and unlisted debt securities as NCDs and NCRPS for the quarter ended June 30, 2024.
CDEL further reported a default of Rs.183.36 crore on the principal repayment for loans and revolving facilities like cash credit from banks and financial institutions. Following the insolvency order by the NCLT, Coffee Day Enterprises Ltd (CDEL) will be delisted from the stock market.
Also Read
Due to defaults on interest and principal payments, lenders have sent ‘loan recall’ notices and started legal disputes with Coffee Day Enterprises Ltd (CDEL). As a result, the company has not recognized any interest since April 2021.
After the death of its founder Chairman V G Siddhartha in July 2019 Coffee Day Enterprises is paring its debts through asset resolutions and has significantly scaled down from the time the trouble started.
Written by – Siddesh S Raskar
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