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The U.S. Court of Appeals for the Third Circuit recently became
the first circuit court to address the question of whether a
corporate parent can set off an obligation that it owes to a
bankrupt company against a claim owed by such company to the
parent s subsidiary. A couple of years ago, in the chapter 11
case of
Orexigen Therapeutics in the District of Delaware,
former Bankruptcy Judge Kevin Gross denied a motion to allow such a triangular setoff. Last month, the Third Circuit