The National Company Law Appellate Tribunal (NCLAT) on Thursday annulled the insolvency proceedings against Coffee Day Enterprises Ltd (CDEL), the parent company of Café Coffee Day (CCD), rejecting a bankruptcy petition filed by IDBI Trusteeship concerning an alleged default of ₹228 crore. This decision followed a challenge by Malavika Hegde, a shareholder and director at CDEL, against the National Company Law Tribunal’s (NCLT) order from August 8, 2024, which had accepted IDBI Trusteeship’s insolvency application. The NCLAT had previously granted interim relief by halting the proceedings on August 14, 2024. However, the proceedings resumed as the NCLAT could not issue a final ruling before the Supreme Court’s deadline of February 21, 2025. IDBI Trusteeship Services Ltd escalated the issue to the Supreme Court, which instructed the NCLAT to resolve the pending appeal by February 21. As the appellate tribunal missed this deadline, the insolvency process was temporarily reinstated. Ultimately, the NCLAT issued its final ruling on Thursday, completely dismissing the insolvency case against CDEL.
The origins of the dispute trace back to September 2023, when IDBI Trusteeship sought insolvency proceedings against CDEL due to unpaid dues. On August 9, 2024, CDEL announced to stock exchanges that it was considering legal options to contest the case. The issue arose from CDEL’s failure to make coupon payments on redeemable non-convertible debentures (NCDs). In March 2019, IDBI Trusteeship had invested ₹100 crore in 1,000 NCDs through a private placement, but CDEL defaulted on coupon payments due between September 2019 and June 2020. On July 28, 2020, IDBI Trusteeship issued a default notice to CDEL and subsequently filed an insolvency application, leading to the NCLT admitting the case in August 2024.
In a related matter, CDEL’s subsidiary Coffee Day Global faced another insolvency petition from IndusInd Bank, which sought bankruptcy proceedings over an alleged default of ₹94 crore. On July 20, 2024, the NCLT admitted Coffee Day Global into insolvency and appointed Shailendra Ajmera as the interim resolution professional to manage the company’s operations. However, IndusInd Bank later resolved the issue amicably and withdrew its insolvency application. The debt was transferred to ASREC (India) Ltd, an asset reconstruction company, prompting both parties to seek settlement. The Chennai bench of NCLAT subsequently annulled the insolvency proceedings.
Café Coffee Day, founded in 1996 by V.G. Siddhartha, rapidly became one of India’s largest coffee chains, with its first outlet opening on Brigade Road in Bengaluru. By 2019, however, CCD was facing significant financial challenges, burdened with ₹7,000 crore in debt.