Coffee Day Global (CDGL) shares rose over 20 per cent on the stock market on Wednesday after the company announced it has reached a deal with IndusInd Bank to avert insolvency proceedings. Coffee Day Global and IndusInd Bank informed the Chennai bench of the National Company Law Appellate Tribunal (NCLAT) on September 13 that they have withdrawn the insolvency lawsuits after reaching a settlement, reported PTI.
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At 3.15, the shares stood at Rs 51.36 up 20 per cent from Tuesday’s close of Rs 42.75.
Earlier, on August 11, the NCLAT had temporarily halted a decision permitting Coffee Day Global to enter the insolvency proceedings. The NCLAT had identified certain debatable issues necessitating further clarification and had instructed IndusInd Bank to submit its response within a two-week period, the report said. Following the settlement by the two parties, a two-member bench comprising Justice M Venugopal and Shreesha Merla on Wednesday set aside the NCLT’s insolvency order against CDGL.
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On July 20, the Bengaluru bench of the National Company Law Tribunal (NCLT) admitted Coffee Day Global, the company operating the Cafe Coffee Day chain, to insolvency. This decision came in response to a petition filed by IndusInd Bank, citing a default of Rs 94 crore.
Coffee Day Enterprises Ltd (CDEL), the parent company of CDGL, has faced difficulties since the passing of its founder Chairman, V G Siddhartha, in July 2019. The company has been working to reduce its debt through asset resolutions.
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According to the PTI report, the Bengaluru bench of the National Company Law Tribunal (NCLT) admitted CDGL to insolvency following a petition by IndusInd Bank claiming dues of Rs 94 crore.
On August 11, 2023, the National Company Law Appellate Tribunal (NCLAT) temporarily suspended the NCLT’s insolvency order against CDGL through an interim order. Malavika Hegde, Director of CDGL and the wife of late VG Siddhartha, challenged the NCLT insolvency order before the appellate tribunal.
In a recent regulatory disclosure, the company said that the IDBI Trusteeship Services has submitted an application against Coffee Day under Section 7 of the Insolvency and Bankruptcy Code, alleging a default amounting to Rs 228.45 crore. Coffee Day Global stated that it is in the process of seeking appropriate legal counsel and will take necessary actions to safeguard its interests in this matter.
