We lawyers and judges may be Dylan’s “writers and critics who prophesize with your pen.” Then, as now, the times for us are a-changin’, as U.S. District Court Judge Kathryn C. Ferguson recognized in her opinion in In re...more
The right to set off a claim is a legal concept through which reciprocal claims between a creditor and a debtor company are settled against each other reducing or extinguishing the smaller claim and leaving only a balance...more
This practice note discusses the use of setoff by creditors as a mechanism to limit loss when a debtor has filed bankruptcy. In bankruptcy, setoff is governed by and subject to the limitations imposed by Section 553 of the...more
Background - During a winding up, the statutory duty of a liquidator is to gather in the estate of the company, which includes recovering any amounts owing to the company. Creditors then submit proofs of debt and receive...more
The Third Circuit’s recent decision in In re Orexigen Therapeutics Inc., 990 F.3d 748 (3d Cir. 2021) holds that section 553 of the Bankruptcy Code, which governs creditor setoffs, requires “strict bilateral mutuality.” As a...more
The U.S. Court of Appeals for the Third Circuit recently became the first circuit court to address the question of whether a corporate parent can set off an obligation that it owes to a bankrupt company against a claim owed...more
Few issues in bankruptcy create as much contention as disputes regarding the right of setoff. This was recently highlighted by a decision in the chapter 11 case of Orexigen Therapeutics in the District of Delaware. Judge...more
In Feltman v. Noor Staffing Grp., LLC (In re Corp. Res. Servs. Inc.), 564 B.R. 196 (Bankr. S.D.N.Y. 2017), the bankruptcy court considered whether section 553 of the Bankruptcy Code creates a right of setoff when no such...more