Back-to-back contract receivables held outside liquidation estate; sub-contractor dues treated as CIRP costs, with limited interest awarded.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....In a back-to-back construction contract, the NCLAT held that where the corporate debtor was entitled only to a 4% margin and had assigned the risks, liabilities and profit share to the sub-contractor, the remaining 96% of receivables from the principal employer belonged to the sub-contractor and was held in trust outside the liquidation estate under section 36(4)(a)(i). It also held that, because the project continued during CIRP to keep the corporate debtor as a going concern, the sub-contractor's running bills formed part of CIRP costs rather than operational debt, and no claim in Form C was required. Interest on the withheld amount was confined to simple interest at 9% up to the date of the impugned order.....