NCLT: The country’s popular coffee restaurant chain Cafe Coffee Day is on the verge of bankruptcy due to debt. The National Company Law Tribunal (NCLT) has given instructions to start the bankruptcy process against Cafe Coffee Day’s parent company Coffee Day Enterprises. Along with this, a resolution professional has also been appointed by accepting the petition of IDBI Trusteeship Services Limited (IDBITSL) for dues of Rs 228.45 crore.
Defaulted in coupon payment of non convertible debenture
The Bangalore bench of NCLT has given its verdict on the petition of IDBI Trusteeship on 8 August. This is considered a big setback for CCD. The company’s stores are spread across the country. Also, the number of people who like its coffee is in lakhs. Resolution professionals will currently look after the daily operations of the company. Coffee Day Enterprises runs a resort and also provides consultancy services and trades in coffee beans. The company had issued non-convertible debentures (NCDs). It has defaulted in their coupon payment.
IDBI Bank had given Rs 100 crore
IDBI Bank had subscribed to 1,000 NCDs through private placement. It also paid Rs 100 crore for this subscription in March 2019. For this, Coffee Day Enterprises entered into an agreement with IDBITSL. It was approved to become the debenture trustee for the debenture holders. However, the company failed to pay coupon payments on several dates between September 2019 and June 2020. After this, on behalf of all the debenture holders, the debenture trustee issued a default notice to the company on July 28, 2020 and approached the NCLT.
The company is in trouble ever since the demise of founder VG Siddhartha
NCLT said that Coffee Day Enterprises has admitted in its annual report for FY 2020 to 2023 that it has not paid interest of Rs 14.24 crore. Coffee Day Enterprises has been in crisis since the death of founder VG Siddhartha in July 2019. However, the company is engaged in reducing debt. In July 2023, NCLT accepted the bankruptcy petition against Coffee Day Global Limited on a petition filed by IndusInd Bank claiming dues of Rs 94 crore. In August 2023, NCLAT put a stay on it. Later, both the parties reached an agreement.
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