What Is a Right of Set Off?

The right of set-off refers to the right of the bankruptcy creditor to the bankrupt when the bankruptcy is declared, and the bankruptcy creditors have the right to offset each other before the bankruptcy distribution according to the bankruptcy procedures. The purpose of the establishment of the right of set-off is to protect the interests of bankrupt creditors who have debts to the bankrupt and to achieve fair settlement of mutual debts. The right of set-off in the bankruptcy law is formed on the basis of the provisions of the civil law on debt cancellation, and the conditions of the provisions of the civil law offset are expanded and restricted according to the characteristics of the bankruptcy procedure. In the bankruptcy proceedings, the two parties can offset each other regardless of whether the types of debt payments are the same, whether they are due, or whether they are subject to conditions of discharge. In the bankruptcy proceedings, the bankruptcy creditor is the only party enjoying the right of set-off. The bankruptcy administrator and the bankrupt shall not claim the set-off. The right of offset shall be exercised by the bankruptcy administrator. For bankruptcy claims that are subject to termination conditions, a guarantee must be provided when offsetting, and those who still hold the creditor's rights after the exemption period is exempted from the guarantee liability. The bankruptcy creditor's rights with suspension conditions cannot be set off because the creditor's rights have not been established. Bankruptcy creditors may claim to set off the conditional claims of the bankrupt, which is regarded as giving up the conditional benefits. In order to prevent the abuse of the right of set-off, the insolvency laws of various countries provide for prohibition of set-off, which usually includes: (1) the bankruptcy creditor is in debt to the bankruptcy consortium after the bankruptcy declaration; (2) the bankrupt's debtor is declared bankrupt (3) After the bankruptcy is known to have ceased to pay or the bankruptcy application is filed, the bankruptcy creditor incurs debts against the bankrupt or the bankrupt's debtor obtains creditors, but the debt occurs If it is based on statutory reasons or the reasons before the situation mentioned above, it is not subject to the prohibition of the prohibition of offsetting. ^[1]

Right of offset

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The right of set-off refers to the right of the bankruptcy creditor to the bankrupt when the bankruptcy is declared, and the bankruptcy creditors have the right to offset each other before the bankruptcy distribution according to the bankruptcy procedures. The purpose of the establishment of the right of set-off is to protect the interests of bankrupt creditors who have debts to the bankrupt and to achieve fair settlement of mutual debts. The right of set-off in the bankruptcy law is formed on the basis of the provisions of the civil law on debt cancellation, and the conditions of the provisions of the civil law offset are expanded and restricted according to the characteristics of the bankruptcy procedure. In the bankruptcy proceedings, the two parties can offset each other regardless of whether the types of debt payments are the same, whether they are due, or whether they are subject to conditions of discharge. In the bankruptcy proceedings, the bankruptcy creditor is the only party enjoying the right of set-off. The bankruptcy administrator and the bankrupt shall not claim the set-off. The right of offset shall be exercised by the bankruptcy administrator. For bankruptcy claims that are subject to cancellation conditions, a guarantee must be provided when offsetting, and those who still hold the creditor's rights after the exemption period is exempted from the guarantee responsibility. The bankruptcy creditor's rights with suspension conditions cannot be set off because the creditor's rights have not been established. Bankruptcy creditors may claim to set off the conditional claims of the bankrupt, which is regarded as giving up the conditional benefits. In order to prevent the abuse of the right of set-off, the insolvency laws of various countries stipulate the prohibition of set-off, usually including: (1) the bankruptcy creditor is in debt to the bankruptcy consortium after the bankruptcy declaration; (3) After the bankruptcy is known to have ceased to pay or the bankruptcy application is filed, the bankruptcy creditor incurs debts against the bankrupt or the bankrupt's debtor obtains creditors, but the debt occurs If it is based on statutory reasons or the reasons before the situation mentioned above, it is not subject to the prohibition of the prohibition of offsetting. ^[1]

Chinese name

Right of offset

Nature

Legal offset

Features

The parties claim to offset

Must not be offset

Obtaining claims against debtors

Article 100 of the Contract Law stipulates that: "If the parties have debts to each other and the types and qualities of the subject matter are not the same, they can also be offset after the two parties have reached consensus."

Article 40 of the new Enterprise Bankruptcy Law stipulates that if a creditor has debts to a debtor before an application for bankruptcy is accepted, he can claim an offset with the administrator.

The "Corporate Bankruptcy Law" stipulates the circumstances in which offsetting is not allowed: (1) The debtor of the debtor obtains the creditor's rights to the debtor after the bankruptcy application is accepted. (2) The creditor is aware of the fact that the debtor is unable to settle the due debt or the application for bankruptcy, and bears the debt to the debtor; except that the creditor is liable for the debt because of the law or the reason that happened one year ago. (3) The debtor's debtor is aware of the fact that the debtor is unable to settle the due debt or the application for bankruptcy, and obtains the creditor's right; however, the debtor's debtor acquires the creditor's right because of the law or because of the reason that the bankruptcy application occurred one year ago .