If you travel to Bilai in Uttar Pradesh, you will see that sugarcane farmers have reached a breaking point. Schools are not extending fee-submission deadlines for their children, and neighbourhood grocery stores are refusing to sell them goods on credit. These farmers are owed over Rs 100 crore (~$12 million) a month by Bajaj Hindusthan Sugar, one of India’s largest sugar companies. The 90-year-old company last recorded annual profits in September 2012—the year Congress leader Pranab Mukherjee was elected India’s president. And it has been a serial defaulter. Still, it has managed to stay out of the National Company Law Tribunal (NCLT)—India's special court for insolvency proceedings—twice since the tribunal came into existence in 2016. But in August 2022, things came to a head when India’s largest public-sector lender, State Bank of India (SBI), in a 2,400-page petition, said it wanted to initiate insolvency proceedings against the sugar maker. It owed over Rs 4,000 crore (~$485 million) to an SBI-led consortium of 12 state-run banks. Since 2016, the NCLT has initiated insolvency proceedings against nearly 6,000 firms. And companies try every way possible to avoid ending up there. That’s exactly what Bajaj Sugar did too. The SBI matter was initially scheduled to be heard on 7 December 2022. But just five days before that, the company thought it could avoid being dragged to the tribunal again. It paid the minimum due of Rs 140 crore (~$17 million) towards term loan instalments and interests. But SBI is in no mood to relent. It will present its case to the NCLT in February. How large companies are giving India’s bankruptcy code the slip and who bears the cost of this undeclared insolvency.
