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
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
On March 19, 2021, the Court of Appeals for the Third Circuit issued its decision in In re Orexigen Therapeutics, Inc., 2021 WL 1046485 (3rd Cir. Mar. 19, 2021), affirming lower courts’ decisions rejecting “triangular setoff”...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
This article provides a brief overview of the somewhat related doctrines of setoff and recoupment in the Chapter 11 context. Setoff is recognized in the Bankruptcy Code to offset the claims of creditors and the debtor in a...more