Coffee Day stock zooms 20% as NCLAT terminates resolution proceedings

Snapping a two-session fall, Coffee Day Enterprises Ltd (CDGL) stock jumped 20% to hit the upper price band of ₹51.36 apiece today, after the Chennai bench of the appellate company tribunal passed an order terminating resolution proceedings against the company, and set aside the National Company Law Tribunal (NCLT) order in an alleged “default” case.

Earlier today, reports also showed Coffee Day Global, which is a subsidiary of Coffee Day Enterprises, and IndusInd bank have reached a settlement, and therefore the insolvency proceedings have been withdrawn against the company. The appellate tribunal (NCLAT) had earlier sought more clarification on certain points from IndusInd Bank in the case and had scheduled the matter to be heard on September 25. IndusInd Bank had alleged a "default" worth ₹94 crore by the company.

Coffee Day, in its statement to the exchanges today, says in respect of the NCLT order, the lender assigned its loan of Coffee Day Global to ARC and filed a joint memo to set aside the NCLT order dated July 20, 2023, with NCLAT, Chennai.

Reacting to the development, Coffee Day shares surged 20% to an intra-day high of ₹51.36 after opening a gap down at ₹42.38. At the time of filing the story, a total of 26.63 lakh shares were trading at the counter against a two-week average of 10.97 lakh.

At this share price, Coffee Day's market cap stands at ₹1,084.99 crore. The Coffee Day shares were down 2.66% in the past week, but have grown 39.21% in the past month. In the past six months and year-to-date period, the Coffee Day shares have surged 57.12% and 5.77%, respectively.

The current development pertains to the disclosure submitted to the exchanges on July 24, 2023, and August 11, 2023, with respect to the NCLT order on July 20, 2023, on admission and the initiation of Corporate Insolvency Resolution Process (CIRP) against the Material Subsidiary Coffee Day Global Limited (CDGL). 

The said NCLT order was appealed before NCLAT, Chennai (NCLAT), which on August 11, 2023, granted a stay against the NCLT's July-20 order.

This week, IDBI Trusteeship Services also filed a default application against the company before the National Company Law Tribunal over ₹228 crore default allegation.

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

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.

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