In mid-2000, the Khaitans-owned McLeod Russel (MRIL) adopted a contrarian strategy in buying tea gardens in bear market. The move shocked many in the industry since the big boys like Tata Tea and Hindustan Lever were pressing the sell button. But it showed the world how the strategy paid off and became the largest tea producer in the world. Sadly, today the tea major is facing insolvency proceedings. The fault lies not with its performance but it is the victim of debt trap for excessive betting with the company’s fortune. MRIL is now facing severe financial trouble. It has borrowed heavily to support the ailing McNally Bharat Engineering, a group company, beyond its financial means for the last few years. MRIL’s debt today is much larger than its total asset value. The estimated total loans and advances at Rs2,900 crore in March 2021 is more than the net worth of the company around Rs1,800 crore. The company struggled with such high debts at both individual level and group level and started faltering on debt servicing. Liquidity crisis deepened further. Recently on 6 August, The National Company Law Tribunal (NCLT), New Delhi Bench admitted an application under the insolvency and bankruptcy code (IBC) against MRIL, the largest bulk tea producer in the country. The bankruptcy proceedings were initiated by power infrastructure company, Techno Electric & Engineering Company in 2019 over a defaulting on repayment of Rs100 crore loan. As of June 2019, MRIL owed Rs104.81 crore to the financial creditor, including the principal amount of Rs100 crore. The loan amount together with interest was to be fully repaid on or before 31 March 2019, according to the plea. 'Unethical and cheating' Techno had provided an inter corporate deposit (ICD) of Rs100 crore to MRIL, subject to the condition that the same would be utilised for the purpose of repayment of all loans relating to four estates due to banks and financial institutions to ensure that all encumbrances created on the estates were released. MRIL had also mortgaged a property. However, the title deeds relating to the estates were not handed over to Techno and the loan amount was not repaid by the due date of 31 March 2019. PP Gupta, managing director, Techno says, “MRIL not only failed to pay us or hand over the original title deeds of the four gardens. But they have sold those gardens to Luxmi Tea without our knowledge. This is unethical and cheating.” Gupta was also upset that it took two years to get the case admitted after it has travelled to four benches. The tribunal in its order said that it was satisfied with the present application, which was complete in all respects and the applicant is entitled to claim outstanding financial debts from the respondent and that there has been a default in payment of the financial debt. Message was sent to Aditya Khaitan, chairman, MRIL for his comment on the dispute but he has not responded. The MRIL board has dissolved and as per the NCLT order, Kanchan Dutta had been appointed as the interim resolution professional (IRP) under the provisions of the IBC. The company’s business and all obligations will continue with the guidance of the IRP. Azam Monem will continue to guide the operations of the company. When contacted for his views Dutta says he is not able to share any comments with the media.