Pelwatte Sugar in deep debt

Pelwatte Sugar Industries fell into deep financial debt long before the government expropriated the property in November 2011, a court action seeking a winding-up of the company has revealed. Allied Commercial Fertilizer (Pvt) Ltd issuing Pelwatte for non-payment of dues and has filed action in the Colombo High Court to wind up the sugar firm. Pelwatte owes Rs. 26.8 million to Allied Commercial in dues with the latter making the claim in January 2011.

The defendant company had then agreed to pay the petitioner four equal, monthly installments commencing in January 2011 and ending in April 2011.

However that didn't happen. Subsequently, the defendant company wrote to Allied Commercial saying it that it was unable to pay the full sum due to a severe liquidity crisis and offered to pay half the due amount.

However even these payments were not made, and are yet due. A 47 per cent stake in Pelwatte Sugar was acquired in March 2011 by Distilleries Co from businessman Ariyaseela Wickramanayake and in November came under the government's acquisition of several companies.

Allied's action is one of two cases filed against the sugar company after it failed to pay its debts. Agstar Fertilizers Plc has also sought a similar action saying Pelwatte owes it over Rs 18 million in unpaid bills.