The National Company Law Tribunal (NCLT) has approved appointment of Shailendra Ajmera, partner at Ernst and Young, as resolution professional (RP) for the insolvency proceedings of Coffee Day Global Ltd (CDGL), according to an official order. Ajmera is also the RP of insolvent Wadia group airline, Go First.

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The Bengaluru bench of the bankruptcy court has admitted Coffee Day Global company for insolvency proceedings on the behest of IndusInd Bank, which filed a claim in court that the firm had defaulted on term loans of Rs 115 crore that were disbursed to it in 2019. Coffee Day Global owns and operates popular chain Café Coffee Day.

”The application filed by one of the lenders against the material subsidiary CDGL before NCLT, Bengaluru, has been admitted (oral order) under Section 7 of Insolvency and Bankruptcy Code, 2016 for initiating CIRP for Rs 94 crore,” CDGL’s parent company said in a regulatory filing.

However, CDGL is waiting for the written order from the NCLT, it said.

”Further, the material subsidiary has informed the company that, it will take the required legal action in this regard,” it added.

In 2022-23, CDGL’s consolidated total income was Rs 920.41 crore. It had reported a loss of Rs 67.77 crore in the year.

As per the annual report of CDEL for FY22, CDGL owns 495 cafes in 158 cities and 285 CCD Value Express kiosks. There are 38,810 vending machines that dispense coffee in corporate workplaces and hotels under the brand.

Coffee Day Global, which is part of listed Coffee Day Enterprises, was promoted by VG Siddhartha, who died of suicide in 2019. It was reported that he had left behind a suicide note addressed to the board of directors and Coffee Day family wherein he revealed that he was in deep debt.

According to the latest annual report of the company, its outstanding debt stood at Rs 67.3 crore from IndusInd Bank as on March 31, 2022.

It is paring its debts through asset resolutions and has significantly scaled it down from the time the trouble started.

In March 2020, CDEL announced repaying Rs 1,644 crore to 13 lenders after concluding a deal with Blackstone Group to sell its technology business park.

Earlier in 2023, capital markets regulator SEBI had also levied a penalty of Rs 26 crore on CDEL for failing to stop the diversion of Rs 3,535 crore from the company’s subsidiary Mysore Amalgamated Coffee Estates Ltd (MACEL), which is an entity related to promoters CDEL is trying to recover the amount legally from MACEL.

With PTI inputs