The appellate tribunal of the bankruptcy court Friday stayed the admission of Coffee Day Enterprises Ltd (CDEL) after it was challenged by the promoter, Malavika Hedge, that default occurred during the “calm period” amid the global pandemic in March 2020 when lenders were barred from approaching the National Company Law Tribunal (NCLT) for default on loans.
The government prohibited lenders from filing insolvency against companies for the default that occurred for a year starting from March 25, 2020, due to the spread of Covid-19.
On July 20 2023, the Bangalore NCLT admitted CDEL for corporate insolvency on a petition filed by IndusInd Bank, as first reported by ET on July 24.
CDEL owns the Café Coffee Day chain that was started by late founder V G Siddhartha. Shailendra Ajmera, interim resolution professional backed by EY, declined to comment.
IndusInd Bank claimed that the default occurred on February 28, 2020 while the company stated it was on April 30, 2020. CDEL’s promoter claims that the lenders modified the default date after submitting the insolvency application.
In its order dated August 11, the National Company Law Appellate Tribunal (NCLAT) has asked the respondent (bank) to file a reply by August 25, while the applicant (the promoter) can file rejoinder by September 14. While granting a stay, the tribunal has scheduled next hearing on September 20.
The order stated that the bank declared the accounts as non-performing loan on June 30, 2020 and the lender recalled the loan on December 7, 2020 asking the borrower and the guarantor to repay the loan in 15 days.
The borrower says that default occurred on April 30, 2020 – which is the period from March 25, 2020 to March 25, 2021 and ‘thus the petition could not have been filed.’
IndusInd Bank submitted the date of default as February 28, 2020 to the information utility – National e-Governance Services (NeSL) after giving six opportunities for the company to respond.
Coffee Day Global had Rs 960 crore debt on March 31, 2022, including an inter-corporate deposit of Rs 119 crore taken from Tanglin Development Ltd, a group entity. It owns 495 cafe outlets in 158 cities and 285 CCD Value Express kiosks, shows the company’s annual report for FY22.
