NCLAT sets aside insolvency proceedings against Coffee Day Enterprises

The National Company Law Appellate Tribunal (NCLAT) on Thursday set aside insolvency proceedings against Coffee Day Enterprises Ltd (CDEL), the parent company of Café Coffee Day (CCD), dismissing a bankruptcy plea filed by IDBI Trusteeship over an alleged ₹228 crore default.

The ruling came in response to a petition by Malavika Hegde, a shareholder and director at CDEL, challenging the National Company Law Tribunal’s (NCLT) 8 August 2024 order, which had admitted IDBI Trusteeship’s insolvency plea against the company. 

NCLAT had already provided interim relief by staying the proceedings on 14 August 2024. However, the proceedings had resumed as the NCLAT was unable to pass its final order within the Supreme Court’s deadline of 21 February 2025. 

IDBI Trusteeship Services Ltd (IDBITSL) had escalated the matter to the Supreme Court, which, on 31 January 2025, directed the NCLAT to resolve the pending appeal by 21 February. However, as the appellate tribunal failed to meet this deadline, the insolvency process was temporarily reinstated.

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The appellate tribunal eventually issued its final order on Thursday, fully setting aside the insolvency case against CDEL.

Case history

The dispute dates back to September 2023, when IDBI Trusteeship approached the Bengaluru bench of the NCLT seeking insolvency proceedings against CDEL over unpaid dues. On 9 August 2024, CDEL informed stock exchanges that it was exploring legal options to contest the case.

The issue stemmed from CDEL’s default on coupon payments for redeemable non-convertible debentures (NCDs). In March 2019, IDBI Trusteeship had subscribed to 1,000 NCDs through a private placement, investing ₹100 crore. However, CDEL defaulted on coupon payments due between September 2019 and June 2020.

On 28 July 2020, IDBI Trusteeship issued a default notice to CDEL and later filed an insolvency application, which resulted in the NCLT admitting the case in August 2024.

IndusInd Bank insolvency case

At the same time, CDEL’s subsidiary Coffee Day Global faced another insolvency petition from IndusInd Bank, which sought bankruptcy proceedings over an alleged ₹94 crore default.

On 20 July 2024, the NCLT admitted Coffee Day Global into insolvency and appointed Shailendra Ajmera as the interim resolution professional to oversee the company’s operations.

However, IndusInd Bank later settled the matter amicably and withdrew its insolvency application. The debt was transferred to ASREC (India) Ltd, an asset reconstruction company, leading both parties to file for settlement. The Chennai bench of NCLAT then set aside the insolvency proceedings.

The rise and fall of Café Coffee Day

Founded in 1996 by V.G. Siddhartha, Café Coffee Day quickly grew into one of India’s largest coffee chains, with its first outlet opening on Bengaluru’s Brigade Road.

By 2019, however, CCD was battling financial distress, burdened with ₹7,000 crore in debt. The crisis deepened following Siddhartha’s death in July 2019. His wife, Malavika Hegde, stepped in to lead the company, initiating asset sales to stabilize its finances.

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As of September 2024, CCD’s presence has shrunk from 495 cafes across 158 cities (FY22) to 450 cafes in 141 cities. However, its vending machine business has expanded significantly, with the number of operational machines rising from 38,810 to 52,581 during the period. These machines, placed in corporate offices and hotels, remain a key revenue driver for the brand.