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  • Writer's pictureRFMLR RGNUL


The Editorial Column is authored by Dhiren Gupta and Qazi Ahmad Masood, Junior Editors at the RGNUL Financial & Mercantile Law Review.


The termination of the Corporate Insolvency Resolution Process (Hereinafter ‘CIRP’) of M/s Coffee Day Global Ltd., the parent company of the Coffee Day Group and Coffee Day Enterprises Ltd., operating the multinational coffee shop 'Café Coffee Day', was announced by the National Company Law Appellate Tribunal (Hereinafter ‘NCLAT’) Chennai bench on September 13, 2023. The initiation of CIRP occurred on July 20, 2023, as a result of a petition filed by IndusInd Bank with the National Company Law Tribunal (Hereinafter ‘NCLT’). The petition said that the entity in question had defaulted on a sum of Rs 94 crore.

Nevertheless, the involved parties have currently resolved, resulting in the conclusion of the insolvency procedures. This article aims to present a concise overview of the case, the resolution achieved through the agreement between the involved parties, and uncertainties even after the termination of the proceedings.


The Insolvency Bankruptcy Code, 2016 (Hereinafter 'IBC'), is an act of law in India that was implemented in 2016 to establish a comprehensive structure for the resolution of corporate insolvency. The CIRP is an established procedure implemented within the framework of the IBC to facilitate the restructuring or liquidation of a financially distressed firm that is unable to meet its outstanding debt obligations. The CIRP is a multifaceted procedure that may entail significant time and financial resources. The initiation of the process might be attributed to either a financial creditor or the company itself. Upon the commencement of CIRP, the management of the company is temporarily suspended, and a Resolution Professional (hereinafter 'RP') is appointed to assume control over the firm's operations and affairs.

The RP assumes the responsibility of evaluating the financial state of the organization and formulating a plan of action for resolution. The resolution plan may encompass many strategies, such as debt restructuring, asset divestment, or corporate liquidation. Subsequently, the resolution plan is presented to the creditors of the corporation to obtain their approval. Upon the approval of the resolution plan, the firm shall undergo restructuring or be subjected to a sale, subsequently leading to the termination of the CIRP. If the resolution plan fails to receive approval, the company will undergo liquidation.

Coffee Day Global Limited (CDGL) successfully averted liquidation by entering into a settlement agreement with its financial creditor, IndusInd Bank. The specific details about the settlement conditions have not been made public; nevertheless, it has been claimed that IndusInd Bank has transferred its debt to an ‘Asset Reconstruction Company’. This implies that the financial institution may have consented to a reduction in the value of its outstanding debt.


In the present matter, IndusInd Bank commenced insolvency proceedings against CDGL. IndusInd Bank contended that CDGL exhibited insolvency and advocated for the initiation of insolvency proceedings as a means to safeguard the interests of the bank's creditors. Contrarily, CDGL presented the viewpoint that it was encountering financial challenges, although it maintained that it was not in a state of insolvency. Furthermore, the corporation contended that initiating insolvency procedures would have adverse effects on its various stakeholders. CDGL further contended that the initiation of insolvency proceedings by IndusInd Bank was premature, asserting that the bank should have allowed the company a greater duration to undertake debt restructuring efforts.

The aforementioned case underscores the significance of IBC as a crucial framework for addressing corporate insolvency matters in India. The IBC has played a significant role in facilitating debt restructuring for firms and preventing their liquidation. Nevertheless, this particular situation also prompts inquiries regarding the equilibrium between the concerns of creditors and the concerns of other parties involved in insolvency procedures. In the present case of CDGL, the recent settlement between the company and its creditor IndusInd Bank raises questions about the balance between the interests of creditors and other stakeholders in insolvency proceedings. Under the IBC, financial creditors are given priority in the distribution of assets in the event of liquidation, while operational creditors are given priority in the distribution of assets in the event of a resolution plan. It remains to be seen how the settlement with IndusInd Bank will impact other stakeholders such as employees and shareholders.


The National Business Law Tribunal (NCLT) Bengaluru bench admitted a case against Coffee Day Global for failing to make a payment of Rs. 94 crores to IndusInd Bank and launched the Corporate Insolvency Resolution Process (CIRP) against the business. The NCLT concluded that Coffee Day Global had indeed defaulted on its payment commitments by hypothecating all of its present assets to seek credit from IndusInd Bank and had been irregular in loan payments since 2018. The tribunal found that despite numerous reminders and letters from the bank, the firm had failed to return the credit facilities. The NCLT's judgement to accept Coffee Day Global's bankruptcy petition was based on the provisions of the Insolvency and Bankruptcy Code (IBC), 2016. The IBC establishes a time-bound framework for resolving insolvency and protects both creditors and debtors.

The NCLT's decision may have a substantial influence on Coffee Day Global's financial status. It is pertinent to note that even before the insolvency procedures were begun, the corporation had Rs 960 crore in debt as of March 2022, which included bank loans and inter-corporate deposits of Rs 119 crore to Tanglin Development, a group subsidiary. The Securities and Exchange Board of India fined the business Rs 26 crore in January 2023. The fine was levied for transferring cash from subsidiaries to a company affiliated with the promoters. According to the market regulator's ruling, Rs 3,535 crore from Coffee Day Enterprises' 7 subsidiaries was transferred to Mysore Amalgamated Coffee Estates Ltd, a firm also affiliated with CDEL's owners.


Coffee Day Global and IndusInd Bank achieved an agreement and agreed to withdraw their separate bankruptcy proceedings. Coffee Day Global's debt was allocated to ASREC (India) Limited, a different corporation, as part of the settlement. Coffee Day Global and IndusInd Bank reached an agreement in which the bank received Rs. 69 crores as the main amount owed on the loan. The bank agreed to dismiss its bankruptcy petition against the firm and discharge all encumbrances on Coffee Day Global's assets. In exchange, Coffee Day Global agreed to drop its counter-claim against IndusInd Bank for Rs. 10 crores.

The company has decided to assign its debt to ASREC (India) Limited, a company that buys non-performing assets (NPAs) from banks and financial institutions. The assignment of Coffee Day Global's loan to ASREC (India) Limited is intended to relieve the company's financial load. ASREC (India) Limited will be responsible for retrieving the overdue cash from Coffee Day Global and will have the right to sue the firm if it fails to do so. In accordance with the settlement reached between Coffee Day Global and IndusInd Bank, the National Company Law Appellate Tribunal (NCLAT) halted the decision admitting Coffee Day Global to the insolvency process and ordered IndusInd Bank to respond within two weeks.


The NCLAT granted an interim ruling that stayed the admission of CDGL to the insolvency proceedings. This stay was given following a settlement between CDGL and its creditor, IndusInd Bank, and the withdrawal of their separate insolvency proceedings. The NCLAT noted the settlement and reversed the ruling admitting CDGL to insolvency. The interim ruling issued by the NCLAT further directed IndusInd Bank to file its response within two weeks. This contributed to the ambiguity by implying that the subject had not yet been entirely settled. The NCLAT convened a hearing on the issue. During the hearing, CDGL and IndusInd Bank informed the NCLAT's Chennai court of their settlement and sought that the bankruptcy proceedings against CDGL be ended. As part of the settlement, the lender allocated its debt to ASREC (India) Limited. The NCLAT noted the settlement and overturned the NCLT ruling admitting CDGL to insolvency. The CDGL CIRP has been terminated. The NCLAT granted the appeal, overturning the impugned judgement of the NCLT Bengaluru panel and dismissing the main corporate case.


The CIRP of CDGL represents a noteworthy milestone in the field of insolvency procedures within India. The resolution of this particular case serves as an illustration of the intricate and demanding nature of implementing the IBC, and the need to carefully manage the competing interests of creditors and other parties involved in such proceedings. The ability of CDGL to avert liquidation by reaching a settlement agreement with its financial creditor, IndusInd Bank, serves as evidence of the efficacy of IBC in easing debt restructuring and safeguarding enterprises confronted with financial difficulties.

Nevertheless, the CDGL case highlights the inherent conflicts present in insolvency processes. Financial creditors, such as IndusInd Bank, endeavour to safeguard their interests and recuperate their outstanding debts, sometimes advocating for insolvency procedures in instances of perceived financial hardship. However, it might be argued by financially struggling organizations, such as CDGL, that they possess feasible strategies for reorganization and want to prevent the negative impacts of insolvency proceedings on their many stakeholders, including employees and shareholders.

The agreement made between CDGL and IndusInd Bank, wherein the bank transferred the debt to an Asset Reconstruction Company (ASREC India Limited), gives rise to significant inquiries regarding the implications of such settlements on the rights and interests of many stakeholders. The distribution of assets in the case of liquidation under IBC prioritises financial creditors, while the outcomes for operational creditors and other stakeholders may vary based on the approval or failure of the resolution plan. Moreover, the grant of an interim stay by NCLAT on CDGL's admission to insolvency proceedings, after the settlement, creates a factor of unpredictability. While the termination of the CIRP has occurred, the long-term consequences of the settlement and its effect on CDGL's financial performance are yet to be determined.

In conclusion, the CDGL case highlights the dynamic nature of insolvency litigation and the delicate balance that must be maintained between the rights and interests of creditors and other stakeholders. It also highlights the need for clarity and transparency in the resolution of insolvency disputes, as well as the significance of a well-functioning legal framework, such as the IBC, for addressing complex corporate insolvency issues in India. Legal experts and interested parties will likely closely monitor the ultimate legal ramifications of CDGL's financial performance and the settlement.


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