Coffee Day Enterprises Shares Surge After NCLAT Ruling
New Delhi: Shares of Coffee Day Enterprises Ltd (CDEL), the parent company of the Cafe Coffee Day chain, soared by 20% on Monday, reaching their upper circuit limit. This surge followed a significant ruling from the National Company Law Appellate Tribunal (NCLAT), which annulled the insolvency proceedings against the company. The stock climbed to Rs 25.65 and Rs 25.53 on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), respectively, marking a new 52-week high.
NCLAT’s Decision to Annul Insolvency Proceedings
The NCLAT’s decision to set aside the insolvency proceedings against CDEL was announced on Thursday, overturning a previous order from the Bengaluru bench of the National Company Law Tribunal (NCLT). The ruling was delivered in open court, although a detailed written order is still pending. This development comes after a period of uncertainty for the company, which had seen its stock locked at a five percent lower circuit for four consecutive sessions prior to the announcement.
Market Context and Stock Performance
Despite the positive news for Coffee Day Enterprises, the broader market experienced a downturn. The BSE Sensex fell by 360.20 points, or 0.49%, closing at 72,837.90, while the NSE Nifty dropped by 103.05 points, or 0.47%, to settle at 22,021.65. The contrast between Coffee Day’s stock performance and the overall market trend highlights the significance of the NCLAT ruling for investors and stakeholders.
Background of the Insolvency Case
The insolvency proceedings against CDEL were initially resumed last month after the NCLAT failed to issue a ruling by the Supreme Court’s deadline of February 21. The Supreme Court had previously directed the NCLAT to resolve the appeal filed by CDEL’s suspended board. The case traces back to August 8, when the Bengaluru NCLT admitted a plea from IDBI Trusteeship Services Ltd, citing a default of Rs 228.45 crore and appointing an interim resolution professional to manage the company.
The situation escalated when the Supreme Court mandated that if the NCLAT did not resolve the appeal by the specified date, the stay on the Corporate Insolvency Resolution Process (CIRP) would automatically be vacated. The NCLAT’s recent ruling has provided a much-needed reprieve for Coffee Day Enterprises, which has been grappling with financial difficulties since the death of its founder, V G Siddhartha, in July 2019. The company has been actively working to reduce its debts through asset resolutions and restructuring efforts.
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