The bankruptcy proceedings for Cafe Coffee Day (CCD) are underway, with a hearing expected this month following an application submitted under Section 7 of the IBC.
Coffee Day has reported to the stock exchanges on September 8 that IDBI Trusteeship Services has lodged an application with the National Company Law Tribunal (NCLT) over an alleged default of ₹228 crore.
The application is part of the ongoing bankruptcy process for the coffee chain CCD. The company is seeking legal advice to safeguard its interests, as stated in its filing.
Last month, the Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) halted the admission of a corporate insolvency case against CCD by NCLT Bengaluru.
The NCLT order against CCD has been suspended until the next hearing of an appeal lodged by Malavika Hedge, CCD’s former director. The notice from NCLT states that Justice Rakesh Kumar Jain and Shreehsa Merla, a technical member, have put the order on hold.
The NCLT order states that there are arguable points in this appeal and has issued a formal notice to the respondents. The reply must be filed by August 25, 2023, and any rejoinder by September 14, 2023. The hearing is scheduled for September 20, 2023.
Malavika Hegde, former director of Coffee Day and wife of the late VG Siddhartha, has appealed against this order before the NCLAT. The appeal questions whether CCD falls under the COVID-19 pandemic-related insolvency moratorium imposed by the Central government.
Hegde argues that the date of default falls within the moratorium period set by the Central government in its June 5, 2020 circular. She contends that the insolvency petition against CCD was invalid from the outset.
In July, IndusInd Bank lodged a complaint with the NCLT claiming that CCD had defaulted on a loan exceeding ₹94 crore. The NCLT approved the bankruptcy petition based on this complaint.
According to a regulatory filing by Coffee Day Enterprises in July, the parent company of Coffee Day Global, the Bengaluru bench of the NCLT passed an order over a plea brought by a financial creditor of the business who sought payment of ₹94 crore in unpaid debts.
On September 8, shares of Coffee Day Enterprises closed 1.41 per cent higher at ₹53.07 each on the BSE.