Kushagra Bajaj, the country's largest sugar manufacturer, 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 to have supplied sugarcane to the company and owe them money.
According to sources, their petition does not specify the exact amount of money owed to them. The farmers' group that filed the petition, Agragami Kissan Samiti UP, could not be reached for comment.
The farmers' petition will be heard by the NCLT in March. It has refused to accept the State Bank of India's petition for insolvency against Bajaj Hindusthan Sugar. According to India's insolvency laws, a company's vendors and suppliers are treated as operational creditors.
While operational creditors are entitled to a portion of the proceeds received by creditors after an insolvency is resolved, they are prioritized below financial creditors such as banks, financial institutions, and bond holders. Sugarcane growers are demanding that they be treated as financial creditors because the raw material they provide is critical for sugar production.
They argue that agriculturists should be treated as a distinct class of creditors, similar to how home buyers are treated. Under India's insolvency laws, home buyers have been granted the status of financial creditors. SBI had approached the NCLT in August, alleging that Bajaj Hindusthan Sugar was in breach of a Rs 5,000 crore loan restructuring agreement.
Bajaj Hindusthan Sugar disclosed in a December 2 stock exchange filing that it had paid all overdues on term loan instalments until September 2022, term loan interests until November 2022, and coupon on optionally convertible debentures for fiscal year 2021-22 to all lenders. Following those payments, it stated that its account was "fully regular" with all lenders.
