Coffee Day Enterprises Stock Surges 20% After NCLAT Ruling

New Delhi, Mar 4 (PTI) Shares of Coffee Day Enterprises, parent company of Coffee Day chains, soared 20 per cent on the bourses for the second straight day on Tuesday after the National Company Law Appellate Tribunal set aside the insolvency proceedings against the company.

Extending the gains for the second straight day, Coffee Day Enterprises Ltd (CDEL) stock surged 20 per cent each to Rs 30.78 and Rs 30.63 apiece -- also its upper circuit limit -- on the BSE and NSE, respectively.

CDEL is the parent company of Coffee Day Group which operates the Cafe Coffee Day chain of coffee houses. It also owns and operates a resort, renders consultancy services and is engaged in the sale and purchase of coffee beans.

On Monday, the company's shares zoomed 20 per cent on both the bourses.

The uptick in the stock assumes significance as the broader market is trading in the red zone. The 30-share BSE Sensex declined 159.90 or 0.22 per cent to 72,926.04, while NSE Nifty fell 51.30 points or 0.23 per cent to 22,068 in the mid-session trade on Tuesday.

On February 27, the NCLAT had set aside the insolvency proceedings against CDEL.

The NCLAT bench of Chennai had set aside an earlier order passed by the Bengaluru bench of the National Company Law Tribunal (NCLT).

In February, insolvency proceedings against CDEL were resumed as the appellate tribunal NCLAT could not pass the order within the specified deadline of February 21, set by the Supreme Court.

Earlier in August last year, the NCLT admitted the plea filed by IDBI Trusteeship Services Ltd (IDBITSL) claiming a default of Rs 228.45 crore and appointed an interim resolution professional to take care of the operation of the debt-ridden company.

The suspended board immediately challenged the order before the appellate tribunal NCLAT, which on August 14, 2024, stayed the insolvency proceedings initiated against CDEL.

This NCLAT order was challenged by IDBITSL before the Supreme Court, which had on January 31, 2025 directed the Chennai bench of NCLAT to dispose of the appeal before February 21, 2025.

The apex court had also directed that if the appeal filed by CDEL is not disposed of by NCLAT, the order passed by the appellate tribunal staying the Corporate Insolvency Resolution Process (CIRP) shall stand vacated automatically.

"In the event the appeal is not disposed of by then, the impugned order passed by the Appellate Tribunal shall stand vacated automatically," it said.

Though NCLAT completed the hearing and reserved its order over the appeal filed by the director of its suspended board, it could not pass the order within the specified time fixed by the Supreme Court.

Coffee Day Enterprises is in trouble after the death of founder Chairman V G Siddhartha in July 2019. It is paring its debts through asset resolutions and has significantly scaled down from the time the trouble started.