Coffee Day Enterprises Ltd experienced a sharp decline in share price by over 19% after the National Company Law Tribunal (NCLT) initiated bankruptcy proceedings. The shares fluctuated between a low of ₹37.55 and a high of ₹41.05, reflecting significant market volatility.
The NCLT’s decision came after IDBI Trusteeship Services Ltd claimed a default of ₹228.45 crore by Coffee Day Enterprises. This financial strain stems from unpaid coupon payments on redeemable non-convertible debentures issued in a private placement deal in March 2019.
The financial challenges deepened with a prior case involving Coffee Day Global Ltd, another arm under Coffee Day Enterprises, which operates the Cafe Coffee Day chain. This entity faced insolvency proceedings by IndusInd Bank over a ₹94 crore claim, complicating the financial scenario for the parent company.
The proceedings against Coffee Day Global were temporarily halted on August 11, 2023, by the National Company Law Appellate Tribunal (NCLAT), allowing time for a potential settlement. This pause was seen as a crucial moment for restructuring efforts within the Coffee Day group.
The ongoing financial distress and legal entanglements present significant challenges for Coffee Day Enterprises, affecting investor confidence and casting doubt on the company’s ability to recover and stabilise its operations amidst these legal and financial pressures.