Uttar Pradesh govt's new sugarcane order faces flak from banks

Data sourced from various agencies show that as on February 16, 2022, in UP around Rs 5,356 crore of sugarcane dues are still to be paid to the farmers for cane purchased from them.

In yet another example of insolvency and bankruptcy law getting sidelined by competing laws, Uttar Pradesh government’s Sugarcane Amendment Act has come under criticism from banks and Insolvency and Bankruptcy Code (IBC) watchers. This is because it allows the state to attach assets or use receivables of a company or subsidiaries based there to recover sugarcane dues of farmers.

The amendment called the UP Sugarcane (Regulation of Supply and Purchase) – Second Amendment Act, 2021, empowers the state government to forfeit the dues, loans or investment that any subsidiary or associate of a sugar manufacturing company had towards the state government