Bengaluru, August 8, 2024 – The National Company Law Tribunal (NCLT) in Bengaluru has initiated insolvency proceedings against Coffee Day Enterprises Ltd (CDEL), the parent company of Cafe Coffee Day (CCD). The decision comes following a petition filed by IDBI Trusteeship Services Ltd (IDBITSL), a financial creditor of CDEL, alleging a default of ₹228.45 crore.
The tribunal, in its order dated August 8, 2024, admitted the insolvency plea, marking a significant development in the ongoing financial struggles of CDEL. The company, which once symbolized the rise of India’s cafe culture, has faced mounting debts and operational challenges over the past few years.
IDBITSL, acting as the trustee on behalf of bondholders, claimed that CDEL failed to honor its debt obligations, prompting the filing of the insolvency petition. With the NCLT’s admission of the case, the company will now undergo the Corporate Insolvency Resolution Process (CIRP), where a resolution professional will be appointed to manage the company’s affairs and work towards settling its debts.
This move adds to the challenges faced by the Coffee Day Group, which has been under financial strain since the tragic death of its founder, V.G. Siddhartha, in 2019. The group has been trying to restructure its operations and reduce its debt burden, but the insolvency proceedings are likely to complicate these efforts.
CDEL’s troubles have also affected its stock prices, which have seen a significant decline since the announcement. Investors and stakeholders will now be closely watching the CIRP process to see if a viable resolution can be reached to safeguard the future of the company.
The NCLT’s order is a crucial step in the legal and financial proceedings against CDEL, and it is expected to have far-reaching implications for the company’s operations and the broader cafe industry in India.