Court Halts Coffee Day Insolvency Case

The National Company Law Appellate Tribunal (NCLAT) has temporarily halted insolvency proceedings against Coffee Day Enterprises Ltd (CDEL), the parent company of the Cafe Coffee Day chain, until the next hearing. This decision comes in response to a plea from IDBI Trusteeship Services Ltd (IDBITSL), which claims CDEL defaulted on a payment of Rs 228.45 crore. The NCLAT has instructed IDBITSL to submit a counter affidavit regarding CDEL's claims, while refraining from commenting on CDEL's status as a defaulter, indicating that this matter will be addressed later. During the proceedings, CDEL's legal representatives argued that the National Company Law Tribunal (NCLT) had made an error in admitting IDBITSL's insolvency application. They contended that IDBITSL lacked the authority to initiate the Corporate Insolvency Resolution Process (CIRP) due to the terms outlined in the Debenture Trustee Agreement and Debenture Trust Deed. CDEL asserted that IDBITSL had not obtained the necessary written instructions from the majority of debenture holders, which is a prerequisite for exercising its rights. Previously, on August 8, the NCLT had accepted IDBITSL's plea and appointed an interim resolution professional to manage CDEL's operations amid its financial struggles. CDEL has faced challenges in meeting its obligations, particularly in relation to coupon payments on redeemable non-convertible debentures (NCDs), leading to the current insolvency proceedings. As CDEL works to resolve its debts through asset sales, the company has significantly reduced its operations since the onset of its financial difficulties.