Global alternate investment fund manager Ares SSG Capital Management has filed an application with the Bengaluru bankruptcy tribunal to admit Coffee Day Enterprises for corporate insolvency due a Rs 228-crore bond default, people aware of the development told ET. The global fund filed the application through IDBI Trusteeship.
Coffee Day Enterprises (CDEL) informed the exchange about the insolvency application filed by IDBI Trusteeship without naming the bondholder. CDEL is Coffee Day Global’s holding company that operates the Café Coffee Day chain.
On March 31, 2022, CDEL had defaulted on bond payments Rs 115.37 crore to Credit Opportunities II Pte and Rs 116.55 crore to India Special Situation Scheme, both funds of Ares SSG Capital.
Coffee Day Global was admitted for corporate insolvency by the National Company Law Tribunal, Bengaluru, on July 20 on an application filed by IndusInd Bank. However, the appellate tribunal stayed the process until the next hearing which is scheduled on September 20, as reported by ET on August 11.
According to the people cited earlier, at least three CDEL lenders have sold their debt to different asset reconstruction companies (ARC) after a failed attempt to restructure the company’s debt.
Yes Bank sold three debt facilities totalling to Rs 159 crore to JC Flowers ARC last financial year. Also, Clix Capital assigned its Rs 100-crore debt facility to Kotak Mahindra Bank-backed Phoenix ARC, while Aditya Birla Finance assigned its Rs 79-crore debt to Rare ARC on March 31, 2023.
Phoenix ARC had applied to NCLT to admit CDEL for corporate insolvency but later withdrew the application after agreeing on a settlement with the company.
According to the CDEL’s annual report for FY23, CDEL offered Phoenix a settlement of Rs 95 crore, of which Rs 45 crore was paid upfront on May 22, 2023 and the balance is to be paid before March 31, 2025.
The other lenders of CDEL include Rabobank International with two debt facilities of Rs 77 crore and Rs 203 crore, Axis Bank (Rs 110 crore), RBL Bank (Rs 120 crore) and Deutsche Investitions (Rs 156 crore).
CDEL’s troubles began with the demise of promoter VG Siddhartha in July 2019, who had disclosed in a suicide note the factors that led to a liquidity crunch in the company.
A subsequent investigation revealed that the promoter company, Mysore Amalgamated Coffee Estate, had borrowed Rs 3,500 crore from CDEL without the consent and knowledge of the board members.
CDEL is yet to recover Rs 3,419.84 crore of the due from MACEL.
Separately, Rare ARC has acquired Coffee Day Global’s Rs 114-crore debt from RBL Bank for Rs 68 crore at an uncontested Swiss auction. ET had reported this on July 9.
