Enforcing English Set-Off Right in the US Bankruptcy Court: In Re Lehman Brothers Holdings Inc.
Corporate Rescue and Insolvency, Vol. 2, p. 124, 2009
12 Pages Posted: 17 Jul 2009
Date Written: July 14, 2009
Timing is crucial for insolvency set-off as a bright line demarcates permissible pre-petition debts from impermissible post-petition debts. In the present case, electronic funds transfers were begun pre-petition and completed post-petition. The US bankruptcy court held that these transfers were impermissible post-petition claims. The court's reasoning is suspect and if the English court has occasion to decide the same issue, it would probably reach a different conclusion. The US bankruptcy court also misunderstood English insolvency set-off rules.
Keywords: Bankruptcy set-off, insolvency set-off, contingent claims, electronic funds transfers, post-petition debts, mutuality for set-off, section 553 of the US Bankruptcy Code, Lehman bankruptcy
JEL Classification: K10, K12, K19, K20, K29, K30, K39, K40, K41, K49
Suggested Citation: Suggested Citation