Template:Crossaffiliate setoff: Difference between revisions
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Amwelladmin (talk | contribs) Created page with "Seems like a cool idea, but don't bet the farm on it, especially where your counterparty is bankrupt — which is the one time you’re really going to want to rely on it. :'..." |
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The court found that [[mutuality]] is a requirement for both [[common law]] and [[contractual set-off|contractual setoff]] under Section 553 of the Bankruptcy Code, and that the contract did not create mutuality for purposes of Section 553. The court further held that the safe harbor provisions for swaps and other derivatives contracts in the Bankruptcy Code do not permit a party to exercise a contractual right to setoff where there is no mutuality.'' | The court found that [[mutuality]] is a requirement for both [[common law]] and [[contractual set-off|contractual setoff]] under Section 553 of the Bankruptcy Code, and that the contract did not create mutuality for purposes of Section 553. The court further held that the safe harbor provisions for swaps and other derivatives contracts in the Bankruptcy Code do not permit a party to exercise a contractual right to setoff where there is no mutuality.'' | ||
More [https://www.davispolk.com/files/files/Publication/3509aab3-e1ed-44ad-9da2-d92b1e7daa24 | More [https://www.davispolk.com/files/files/Publication/3509aab3-e1ed-44ad-9da2-d92b1e7daa24 here]. | ||
Revision as of 12:31, 18 April 2018
Seems like a cool idea, but don't bet the farm on it, especially where your counterparty is bankrupt — which is the one time you’re really going to want to rely on it.
- In a recent decision issued in the Lehman Brothers Inc. SIPA proceeding the court held that a contractual right to effect a cross-affiliate setoff is unenforceable in bankruptcy.
The court found that mutuality is a requirement for both common law and contractual setoff under Section 553 of the Bankruptcy Code, and that the contract did not create mutuality for purposes of Section 553. The court further held that the safe harbor provisions for swaps and other derivatives contracts in the Bankruptcy Code do not permit a party to exercise a contractual right to setoff where there is no mutuality.
More here.