News & Analysis as of

Setoff Rights

Jones Day

Business Restructuring Review Vol. 23 No. 6 - November–December 2024

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Hertz: Third Circuit Weighs In On Make-Whole Premiums And The “Solvent-debtor Exception” In Chapter 11 Cases - A handful of recent high-profile court rulings have considered whether a chapter 11 debtor is obligated to pay...more

Troutman Pepper Locke

Can I Net Amounts Owed to the Debtor Against Amounts Owed to Me? - Creditor’s Rights Toolkit

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There are two similar but distinct mechanisms through which a creditor might net amounts owed to the debtor against amounts owed by the debtor — setoff and recoupment. Understanding the distinction between them, and how...more

Jones Day

New York Bankruptcy Court: Setoff and Unjust Enrichment Cannot Be Asserted as Affirmative Defenses in Bankruptcy Avoidance...

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In a 2021 ruling, the U.S. Court of Appeals for the Second Circuit revived nearly 100 lawsuits seeking to recover fraudulent transfers made as part of the Madoff Ponzi scheme. In one of the latest chapters in that resurrected...more

Goulston & Storrs PC

Earnout Provisions

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Market Trends: What You Need to Know - As shown in the American Bar Association’s Private Target Mergers and Acquisitions Deal Points Studies: - Earnout provisions were included in 20% of the deals reported in the...more

Jenner & Block

Recent Developments in Bankruptcy Law, January 2022

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1. AUTOMATIC STAY - 1.1 Covered Activities - Taggart v. Lorenzen standard applies to stay violation in a corporate case. The debtor sold assets prepetition. After the petition date, the buyer demanded payment of certain...more

Carlton Fields

Real Property, Financial Services, & Title Insurance Update: Week Ending October 8, 2021

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Real Property Update - Bert Harris Act: Certifying question whether the 2021 amendment to the Bert J. Harris Jr. Private Property Rights Protection Act clarifies the existing law so that plaintiff may maintain an action...more

Jones Day

Business Restructuring Review | July-August 2021

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Chapter 15 Update: U.S. Bankruptcy Court Refuses To Enforce Order Approving Indonesian Debt Restructuring Plan Due To Third-party Releases - Cross-border bankruptcy cases filed in the U.S. under chapter 15 of the...more

Jones Day

Setoffs Under Shari'a-Compliant Investment Contracts Not Safe Harbored in Bankruptcy

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In In re Arcapita Bank B.S.C., 2021 WL 1603608 (Bankr. S.D.N.Y. Apr. 23, 2021), the U.S. Bankruptcy Court for the Southern District of New York addressed the interaction between purported setoff rights arising under...more

Jones Day

First Impressions: Third Circuit Scuttles Triangular Setoff in Bankruptcy

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The ability of a creditor to exercise its contractual, common law or statutory rights under non-bankruptcy law to set off amounts owed to a debtor in bankruptcy against the debtor's obligations to the creditor gives...more

Troutman Pepper Locke

Third Circuit Rules that Parties Cannot Contract Around the Mutuality Requirement for Setoff in Bankruptcy

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On March 19, in a matter of first impression, the Third Circuit Court of Appeals (Court) held that triangular setoff is not permissible in bankruptcy due to Bankruptcy Code Section 553(a)’s mutuality requirement, and that...more

Bailey & Glasser, LLP

Third Circuit Signals Possible Limitations On Setoff Rights

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Parties to corporate transactions often rely on contractual setoff rights to help ensure that they can be paid or at least limit the amounts lost if the counterparty fails to pay.  While the Bankruptcy Code generally protects...more

Faegre Drinker Biddle & Reath LLP

Third Circuit Axes Triangular Setoffs in Bankruptcy

In a March 19, 2021, decision in In re Orexigen Therapeutics, Inc., the Third Circuit joined the Second, Fifth and Seventh Circuits, prohibiting triangular setoff in a bankruptcy proceeding. A triangular setoff occurs when...more

Lowenstein Sandler LLP

Third Circuit Eschews Setoff Creativity In Favor Of A Simple Mutuality Test

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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

Kerr Russell

Why Setoff And Recoupment Matters To Businesses

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As many industries continue to struggle due to the ongoing pandemic, and invoices remain unpaid, it is more important than ever for businesses to understand their setoff and recoupment rights. These rights can be critical to...more

Jones Day

Another Bankruptcy Court Joins the Majority Camp on Post-Plan Confirmation Setoff

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In In re Rogers Morris, 2020 WL 1321894 (Bankr. N.D. Miss. Mar. 16, 2020), the U.S. Bankruptcy Court for the Northern District of Mississippi contributed to an existing split among the courts by joining the majority view in...more

Goulston & Storrs PC

COVID And M&A Earnouts What’s Market?

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The COVID-19 virus has ushered in unprecedented and challenging times for our country and our global community.  From the deeply personal pain and suffering caused by the virus as a health pandemic to behavioral adjustments...more

Perkins Coie

Giving Value to Representations and Indemnifications in Distressed Transactions

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Indemnification obligations are used to allocate risk between a buyer and a seller in nearly all mergers and acquisitions transactions. In an acquisition of a distressed company or its assets, however, the seller may not be...more

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