Template:Set-off and netting: Difference between revisions

From The Jolly Contrarian
Jump to navigation Jump to search
← Older editNewer edit →
VisualWikitext
No edit summary
No edit summary
Line 1: Line 1:
===The difference between [[close-out netting]] and [[set-off]]===
===The difference between [[close-out netting]] and [[set-off]]===
*'''[[Close-out netting]]''', in the learned words of [[Allen & Overy]], is a contractual process comprising [[early termination]], [[valuation]] and determination of a net balance. This last step may involve a [[contractual set-off]] but, saucily, the considered view of ISDA’s counsel for England and Wales is that the net effect of the agreement is to arrive a a net balance ''without'' the good offices of contractual set-off<ref>Sigh - except where there are unpaid amounts payable under Section {{isdaprov|2(a)(i)}}. You knew there’d be some kind of qualification though, didn’t you.</ref>
*'''[[Close-out netting]]''', in the learned words of [[Allen & Overy]], is a contractual process comprising [[early termination]], [[valuation]] and determination of a net balance. This last step may involve a [[contractual set-off]] but, saucily, the considered view of ISDA’s counsel for England and Wales is that the net effect of the agreement is to arrive a a net balance ''without'' the good offices of contractual set-off<ref>Sigh - except where there are unpaid amounts payable under Section {{isdaprov|2(a)(i)}}. You knew there’d be some kind of qualification though, didn’t you.</ref> According to the [[International Institute for the Unification of Private Law|UNIDROIT]]<ref>[https://www.unidroit.org/instruments/capital-markets/netting “Principles on the operation of close-out netting provisions”</ref>, close-out netting resembles the classical [[insolvency set-off]], but is purportedly wider: general [[set-off]] requires mutual debts that are already due, while [[close-out netting]] envisages the netting of obligations that are ''not'' yet due.<ref>The {{isdama}} achieves this by accelerating them, mind.</ref> Thus, [[set-off]] is narrower that close-out netting.
*'''[[Set-off]]''' is a legal principle permitting (or requiring) a debtor to discharge its debt by setting off a cross-claim owed to the debtor against the debt. There are various legal bases for set-off, including, under English law, [[equitable set-off]], set-off in judicial proceedings under the Civil Procedure Rules, [[statutory set-off]] under the Insolvency Rules 1986 upon a winding upor administration and [[contractual set-off]]. <br />
*'''[[Set-off]]''' is a legal principle permitting (or requiring) a debtor to discharge its debt by setting off a cross-claim owed to the debtor against the debt. There are various legal bases for set-off, including, under English law, [[equitable set-off]], set-off in judicial proceedings under the Civil Procedure Rules, [[statutory set-off]] under the Insolvency Rules 1986 upon a winding upor administration and [[contractual set-off]]. <br />

Revision as of 09:20, 13 December 2019

The difference between close-out netting and set-off

  • Close-out netting, in the learned words of Allen & Overy, is a contractual process comprising early termination, valuation and determination of a net balance. This last step may involve a contractual set-off but, saucily, the considered view of ISDA’s counsel for England and Wales is that the net effect of the agreement is to arrive a a net balance without the good offices of contractual set-off[1] According to the UNIDROIT[2], close-out netting resembles the classical insolvency set-off, but is purportedly wider: general set-off requires mutual debts that are already due, while close-out netting envisages the netting of obligations that are not yet due.[3] Thus, set-off is narrower that close-out netting.
  • Set-off is a legal principle permitting (or requiring) a debtor to discharge its debt by setting off a cross-claim owed to the debtor against the debt. There are various legal bases for set-off, including, under English law, equitable set-off, set-off in judicial proceedings under the Civil Procedure Rules, statutory set-off under the Insolvency Rules 1986 upon a winding upor administration and contractual set-off.
  1. ↑ Sigh - except where there are unpaid amounts payable under Section 2(a)(i). You knew there’d be some kind of qualification though, didn’t you.
  2. ↑ [https://www.unidroit.org/instruments/capital-markets/netting “Principles on the operation of close-out netting provisions”
  3. ↑ The ISDA Master Agreement achieves this by accelerating them, mind.
Retrieved from "https://jollycontrarian.com/index.php?title=Template:Set-off_and_netting&oldid=35494"