Third Circuit Axes Triangular Setoffs in Bankruptcy
By EsqSocial Corporation 20/04/21
In a March 19, 2021, decision in In re Orexigen Therapeutics, Inc., the Third Circuit joined the Second, Fifth and Seventh Circuits, prohibiting triangular setoff in a bankruptcy proceeding. A triangular setoff occurs when Party A attempts to set off a debt owed by it to Party B against a debt owed by Party B to Party C. This raises practical concerns for parties that have multiple contracts with a third party, particularly if affiliates or subsidiaries are parties to some of those contracts....
By: Faegre Drinker Biddle & Reath LLP