The ability of a creditor to offset any liability it may have to a debtor against the amount of the debtor's obligation to the creditor is an important right. The Bankruptcy Code expressly preserves that right, provided it...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
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