The operator of Cafe Coffee Day, Coffee Day Global, has been admitted for corporate insolvency by the Bengaluru bench of the National Company Law Tribunal (NCLT), according to a report by Economic Times on Monday. The bankruptcy court issued an oral order last week, admitting the unlisted company for insolvency based on a petition filed by IndusInd Bank. So far, there has been no official statement from the Coffee Day Group.
Coffee Day Global’s Background and VG Siddhartha’s Tragic Suicide
Coffee Day Global is a subsidiary of Coffee Day Enterprises. VG Siddhartha founded Coffee Day Global. Sadly, he died by suicide in 2019. He left a suicide note for the board of directors and Coffee Day family, revealing his debt situation. As of March 31, 2022, the company had outstanding debt from IndusInd Bank. The amount was Rs 67.3 crore, as mentioned in their latest annual report.
Negotiations Deal Between IndusInd Bank and Coffee Day Global Fails
The tribunal’s decision to admit Coffee Day Global for insolvency came after the negotiations between IndusInd Bank and the company collapsed, as mentioned in the report. The NCLT released an official order stating that Skanda Legal and Tatva Legal are the two counsels handling the case.
Sebi’s Penalty on Coffee Day Enterprises for Fund Diversion
In January 2023, Sebi fined Coffee Day Enterprises Rs 26 crore for transferring funds from subsidiaries to a promoter-related company. The diverted amount was Rs 3,535 crore from seven subsidiaries to Mysore Amalgamated Coffee Estates Ltd.
Coffee Day Enterprises has seven subsidiaries, including Coffee Day Global and Coffee Day Trading. Sebi directed them to recover the outstanding dues from MACEL and its related entities, along with due interest owed to the subsidiaries.
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