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The Bankruptcy StrategistFeaturesBankruptcyLitigation

Don't Set Me Off: No Triangular Setoff Among Affiliated Entities and a Debtor Counterparty

By Adam C. Rogoff
March 01, 2019

 

The Bankruptcy Code provides debtors with the opportunity for a fresh start in the face of mounting financial obligations. The Code also provides for fair and equitable treatment of creditors. These policies date back decades. In today's global economy, companies often have multiple business lines operating through separate entities. Outside of bankruptcy, these affiliated operations sometimes transact in a holistic — albeit legally distinct — debtor-creditor relationship with their counterparty. But, as this article discusses, the legal separateness of affiliates can hinder economic protections that a creditor might have otherwise when its counterparty files for bankruptcy.

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