Cafe Coffee Day Faces Bankruptcy Proceedings as Indusind Bank Initiates Insolvency

Famous coffee chain, Cafe Coffee Day, is currently going through the bankruptcy process, which was initiated by Indusind Bank.

The operator of the Cafe Coffee Day chain, Coffee Day Global, was recently admitted for corporate insolvency. This development comes after IndusInd Bank filed a petition to the National Company Law Tribunal (NCLT), as reported by Economic Times, citing insider sources.

The Bengaluru Bench of the bankruptcy court has formally admitted the company for corporate insolvency. The NCLT's decision came after the negotiations between IndusInd Bank and Coffee Day Global failed to reach a resolution, as mentioned by ET's Maulik Vyas and Sangita Mehta.

However, Mint has not independently verified the status of the bankruptcy process concerning the Cafe Coffee Day operator. As of now, there has been no official statement from the Coffee Day Group.

According to the official order released by NCLT, the legal counsels representing the applicant and respondent are Skanda Legal and Tatva Legal, respectively.

In January 2023, the company faced a penalty of ₹26 crore from the capital markets regulator SEBI. The fine was imposed due to the diversion of funds from subsidiaries to a company related to the promoters. SEBI found that approximately ₹3,535 crore was diverted from seven subsidiaries of Coffee Day Enterprises Ltd (CDEL) to Mysore Amalgamated Coffee Estates Ltd, an entity connected to the promoters of CDEL, as stated in the 43-page order.

The seven subsidiaries involved in the diversion of funds include Coffee Day Global, Tanglin Retail Reality Developments, Tanglin Developments, Giri Vidhyuth (India) Ltd, Coffee Day Hotels and Resorts, Coffee Day Trading, and Coffee Day Econ.

About Coffee Day Group: The Coffee Day group was established in 1993 through Coffee Day Global Limited. It has a diversified presence in various aspects of the coffee business, from procurement to processing and roasting of coffee beans. The company operates its cafes in more than 200 cities across India. Coffee Day Global's portfolio also includes Technology Parks & SEZs, Logistics, Investments, Financial Services, and Hospitality. Initially formed as a partnership firm under the Indian Partnership Act, 1932, the company was later converted into a private limited company under Part IX of the Companies Act, 1956, as Coffee Day Holdings Company Private Limited.

Source:Livemint