Triangular Setoff - In re Semcrude Affirmed
A few months ago, I discussed the decision of a Delaware bankruptcy court in which a contractually created triangular setoff arrangement was found to be violative of Section 553's mutuality requirement. The case was In re Semcrude, L.P., Case No. 08-11525 (BLS), 2009 WL 68873 (Bankr. D. Del. January 9, 2009). In a relatively short opinion released April 30, 2010, the District Court affirmed, adopting without revision the Bankruptcy Court's rationale and conclusions. The citation to the District Court's decision is In re Semcrude, L.P., --- B.R. ---, 2010 WL 1737103 (D. Del. April 30, 2010).
For the typical practitioner, myself included, triangular setoff will rarely, if ever, be an issue. I just happen to have a case in which the issue is pivotal, and thought the affirming opinion by the District Court was well worth noting. We'll have to wait and see if it is appealed further.
