Reinterpreting Section 553's Mutuality Requirement

Law360, New York (January 16, 2009, 12:00 AM EST) -- The decision in In re SemCrude LP, et al., prohibiting parties from contracting around Bankruptcy Code section 553’s mutuality requirement may disrupt customary business practices, including those widely used in the energy, natural gas and crude oil markets, because it rules that contracting for cross affiliate netting does not “create” the mutuality required for setoff.

On Jan. 9, 2009, the U.S. Bankruptcy Court for the District of Delaware (Judge Brendon L. Shannon presiding) in the In re SemCrude LP, et al. (debtors) bankruptcy cases held that,...
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