Set-off of Claims in Bankruptcy Proceedings – Is It Allowed?
In a situation where a creditor of a company subject to bankruptcy proceedings also has a debt towards the bankrupt debtor, the question arises whether their mutual claims may be set off in bankruptcy proceedings. The answer is affirmative, but only upon fulfillment of certain conditions, which will be discussed below. General Conditions for Set-off The general conditions for set-off are prescribed by the Law on Obligations. For two mutual claims to be set off, it is necessary that both claims relate to money or other fungible items of the same type and quality, and that both are due. However,...