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Third Circuit Confirms Triangular Setoffs Unenforceable in Bankruptcy | Pillsbury Winthrop Shaw Pittman LLP


TAKEAWAYS
Section 553 of the Bankruptcy Code requires “strict bilateral mutuality.”
Thus, a creditor cannot set off an obligation it owes to a bankrupt debtor against an obligation that the debtor owes to the creditor’s affiliate (a so-called triangular setoff).
Creditors cannot simply contract around section 553’s mutuality requirement it is a hard and fast prerequisite to any setoff effectuated in bankruptcy.
The Third Circuit’s recent decision in
In re Orexigen Therapeutics Inc., 990 F.3d 748 (3d Cir. 2021) holds that section 553 of the Bankruptcy Code, which governs creditor setoffs, requires “strict bilateral mutuality.” As a result, notwithstanding the parties’ contract, a creditor cannot set off an obligation it owes to a debtor in bankruptcy against an obligation that the debtor owes to the creditor’s affiliate (a so-called triangular setoff.) ....

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Whistleblower Developments for April 2021


Thursday, April 22, 2021
Whistleblower Developments is a periodic report covering significant cases, decisions, proposals, and legislation related to whistleblower statutes and how they may impact your business. Recent developments include:
SEC Whistleblower Program Awards Total Over $23 Million in the First Quarter of 2021, Including Award Based on DOJ Non-Prosecution Agreement
Although its awards were substantially lower than those during the record-setting quarter at the end of 2020, the SEC Whistleblower Program distributed sizable awards in the first quarter of 2021 to whistleblowers whose information led to an enforcement actions. Notable awards issued this quarter include the following:
On February 23, 2021, the SEC announced an award of more than $9.2 million to a whistleblower who provided information that led to successful related actions by the U.S. Department of Justice, including a non-prosecution agreement (NPA) or deferred prosecution ag ....

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