Coffee Day Enterprises shares crash 15% after default application filed against the company
Shares of Coffee Day Enterprises crashed 15% on September 11, 2023, after IDBI Trusteeship Services filed a default application against the company before the National Company Law Tribunal (NCLT).
The application was filed under Section 7 of the Insolvency and Bankruptcy Code, for alleged default of Rs 228.45 crore. Coffee Day Enterprises said in a regulatory filing that it is seeking appropriate legal advice and will take all appropriate steps to protect its interest in the matter.
The NCLT had previously stayed an order allowing Coffee Day Global, the company’s subsidiary that runs the Cafe Coffee Day chain, to be admitted to the insolvency process. The NCLAT had noted that it had found certain arguable points that needed clarification and asked IndusInd Bank to file its response in two weeks.
The matter is likely to come up for a hearing on September 25.
Coffee Day Enterprises reported a net profit of Rs 21 crore in the first quarter of fiscal year 2023, against a loss of Rs 17 crore in the same period last year. Revenue grew 18% to Rs 247 crore.
The company owns 495 cafes in 158 cities. Additionally, it has set up 285 CCD Value Express kiosks and vending machines across workplaces and businesses.
The default application by IDBI Trusteeship Services is a setback for Coffee Day Enterprises, which has been struggling to repay its debts. The company has been facing financial difficulties since the death of its founder, VG Siddhartha, in 2019.
The NCLT’s decision on the default application will be crucial for Coffee Day Enterprises. If the company is admitted to the insolvency process, it could lead to a sale of its assets and a restructuring of its debt.
The stock market reaction to the default application is a sign of the investor sentiment towards the company. The sharp decline in the share price shows that investors are concerned about the company’s future.
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