Insolvency plea against Coffee Day over ₹228 cr loan default
₹228 crore, the company said in a regulatory filing on Friday. Coffee Day Enterprises is the parent company of the Coffee Day group. “The company is seeking appropriate legal advice and will take all appropriate steps to protect its interest in the matter," Coffee Day Enterprises said in the statement on the stock exchanges.
IDBI Trusteeship has filed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, which provides for a creditor to initiate insolvency against a corporate debtor. Meanwhile, IndusInd Bank, one of the financial creditors, had moved NCLT against Coffee Day Global for initiating insolvency proceedings. It had a default of ₹94 crore.
On 20 July, NCLT admitted IndusInd’s plea and ordered insolvency against the company. Shailendra Ajmera was appointed as the interim resolution professional for the company to oversee the day-to-day affairs of the company. Aggrieved by this order, the company approached the appeals forum—National Company Law Appellate Tribunal—which stayed the NCLT order against the company.
“The operation of the impugned order shall remain stayed," NCLAT held. Last week, the National Financial Reporting Authority (NFRA) slapped a penalty on three entities, including two individual auditors, for lapses in the auditing of Coffee Day subsidiary Tanglin Developments Ltd (TDL). The penalty includes a ₹1 crore levy on audit firm Sundaresha & Associates, which has also been barred from serving as auditors or internal auditors of any company for four years.
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