ARTICLE
22 March 2018

The Right To Set-Off During Insolvency Proceedings

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Mayer Brown

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The rules on set-off under certain circumstances allow to „settle" a claim with a counterclaim and, thus, to avoid making back and forth payments.
Germany Insolvency/Bankruptcy/Re-Structuring

The rules on set-off under certain circumstances allow to settle" a claim with a counterclaim and, thus, to avoid making back and forth payments. In contentious situations, the set-off enables the party pleading the set-off to enforce its own claim in an easy way. This easy form of satisfaction is even available to the creditor in situations where the debtor's assets have deteriorated. However, in insolvency proceedings, special rules apply with regard to set-off which might either make a set-off impossible in a given case or entail the risk of the set-off being subject to avoidance rights by the insolvency administrator. This article provides an overview of the possibility to declare set-off and its limits in the financial crisis of the party against which set-off is declared.

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Originally published 21 March 2018

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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