NCLAT Sets Aside Insolvency Proceedings Against Coffee Day Enterprises

New Delhi, Feb 27 (PTI) The National Company Law Appellate Tribunal (NCLAT) on Thursday set aside the insolvency proceedings against Coffee Day Enterprises Ltd (CDEL), which owns the Cafe Coffee Day chain.

A two-member NCLAT bench of Chennai bench comprising justices Sharad Kumar Sharma and Jatindranath Swain set aside an earlier order passed by the Bengaluru bench of the National Company Law Tribunal.

The latest order was pronounced in the open court and a detailed order is still awaited.

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.

Last week, 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 on August 8 last year, the Bengaluru bench of the NCLT (National Company Law Tribunal) 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.