The End Of Triangular Setoff As We Know It?

Law360, New York (February 9, 2009, 12:00 AM EST) -- Setoff is a doctrine based as much on practical considerations as on equitable ones. As numerous courts have observed, setoff "is grounded on the absurdity of making A pay B when B owes A."[1]

The Bankruptcy Code does not create any rights of setoff, however, but merely preserves such rights to the extent that they exist under applicable nonbankruptcy law and additionally either satisfy the various conditions set forth in Section 553 of the Bankruptcy Code or are protected by the "safe harbor" provisions of the...
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