Shares of Coffee Day Enterprises Ltd, the parent of Cafe Coffee Day, tanked 16% today amid heavy selling in the stock after IDBI Trusteeship Services filed a default application against the company before the National Company Law Tribunal over ₹228 crore default allegation.

Shares of the company opened gap down at ₹47.11 as compared to ₹53.07 during the previous session. During the intra-day session so far, shares of CDEL fell to intra-day low of ₹43.35. The average trade price stood at ₹45.66, with total trading quantity of 10,27,952.

At the filing of filing the report, the stock was trading 14.12% down at ₹45.60 on the BSE. In contrast, Sensex and Nifty, both are trading in the positive territory at 67,159.60 and 20,004.95, respectively.

CDEL on September 8, 2023, had informed that IDBI Trusteeship has filed an application of "default" against the company. "This is to inform you that an application has been filed against the Company under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy Rules, 2019 by IDBI Trusteeship Services Limited before the National Company Law Tribunal, Bengaluru for alleged default of ₹228,45,74,180," CDEL said.

The company said it is seeking "appropriate legal advice", and will take all "appropriate steps" to protect its interest.

The development comes amid the NCLAT's (National Company Law Appellate Tribunal) order in August, staying an NCLT order initiating an insolvency process against Coffee Day Global on a plea of IndusInd Bank. The appellatte tribunal sought more clarification on certain points from IndusInd Bank. The matter will be heard on September 25. IndusInd Bank had alleged a "default" worth ₹94 crore by the company.

The company had reported 18% growth in revenue on year-on-year at ₹247 crore in April-June quarter of FY24. The company's net profit stood at ₹21 crore as compared to the loss of ₹17 crore in the year-ago period. Its EBITDA stood at ₹63 crore, up 97% on YoY.

In another news, the Securities Appellate Tribunal (SAT) this year stayed the ₹26-crore penalty levied on Coffee Day, by the Securities and Exchange Board of India (SEBI). SEBI in January 2023 had imposed the said penalty on Coffee Day for the alleged diversion of funds worth ₹3,535 crore by its subsidiaries to Mysore Amalgamated Coffee Estates Ltd (MACEL), an entity related to CDEL promoters. SEBI in its 43-page order asked Coffee Day Enterprises to recover the amount from MACEL and other connected entities and pay the penalty within 45 days of receipt of the order.

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