Coffee Day Global and IndusInd bank told the Chennai bench of National Company Law Appellate Tribunal (NCLAT) on September 13 that they have reached a settlement and that the two parties have withdrawn insolvency litigations. NCLAT took their submissions on record and set aside the order admitting Coffee Day Global to insolvency.
Senior Advocate Arvind Pandian and lawyer Pawan Jhabak informed the appellate tribunal that Coffee Day Global's loan has been assigned to a company called ASREC (India) Limited in September 2023 . Lawyer Chitra Nirmala, appearing for IndusInd Bank, agreed with Pandian's submissions and asked the appellate tribunal to set aside the insolvency order.
On August 11, NCLAT stayed the order allowing Coffee Day Global, which runs the Cafe Coffee Day chain in India, to be admitted to the insolvency process. It is to be noted that the stay is only an interim order. While issuing the stay order, the NCLAT noted that it has found certain arguable points that need clarification and asked IndusInd Bank to file its response in two weeks. The matter is likely to come up for hearing on September 25.
Background
On July 20, the Bengaluru bench of the National Company Law Tribunal (NCLT) admitted Coffee Day Global to insolvency after IndusInd Bank moved a petition alleging that the former defaulted on Rs 94 crore.
Coffee Day Global Limited owns 495 cafes in 158 cities and 285 CCD Value Express kiosks. Also, there are 38,810 vending machines that dispense coffee in corporate workplaces and hotels under the brand. The order passed by a bench of NCLT comprising Justice (retd) Krishnavalli and technical member Manoj Kumar Dubey came nearly a year after IndusInd Bank filed the petition in August 2022. The order noted that Coffee Day obtained various credit facilities from IndusInd Bank in 2018. The facilities included secured overdraft EPC/PSFC/PCFC/FBD/FBP, bank guarantee, performance guarantee, short-term loan as export advance, and also derivative limits/forward cover.
NCLT held that while Coffee Day Global raised many arguments on the nature of the petition filed by the bank, it has nowhere disputed the default amount, nor contended the bank’s submissions regarding the dates on which it defaulted.
The tribunal, on being satisfied that there has indeed been a default of payment by Coffee Day Global, admitted the plea of insolvency and ordered a moratorium to kick in.
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