The country’s largest sugar manufacturer helmed by Kushagra Bajaj is facing an insolvency lawsuit from the state-owned bank.
The farmers want to be treated as financial creditors of the sugar manufacturer because they claim that they have supplied sugarcane to the company and have outstanding dues which have not been paid. Their petition does not specify the exact quantum of dues owed to them, according to sources.
Agragami Kissan Samiti UP, the farmers group that has filed the petition, could not be reached for a comment.
NCLT will hear the farmers’ plea in March. It has not admitted State Bank of India’s petition for insolvency proceedings against Bajaj Hindusthan Sugar.
Vendors and suppliers to a company are treated as operational creditors as per India’s insolvency laws. While operational creditors are eligible for a share of the proceeds that the creditors receive once an insolvency is resolved, they rank lower in priority to financial creditors such as banks, financial institutions and bond holders.
The sugarcane growers are demanding that they should be treated as financial creditors because the raw material they provide is critical for the production of sugar. They have claimed that agriculturists should be treated as a unique class of creditors in the same way that home buyers are treated. Home buyers have been granted the status of financial creditors under India’s insolvency laws.SBI had approached NCLT in August claiming Bajaj Hindusthan Sugar was in non-compliance with a Rs 5,000 crore loan restructuring agreement. In a December 2 stock exchange filing, Bajaj Hindusthan Sugar informed that it had paid entire overdues towards term loan instalments till September 2022, term loan interests till November 2022 and payment of coupon on optionally convertible debentures for financial year 2021-22 to all lenders. It said that its account was “fully regular” with all the lenders after those payments.