On October 4, 2011, Judge James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York ruled in In re Lehman Bros. Inc., 2011 WL 4553015 (Bankr. S.D.N.Y. Oct. 4, 2011), that a “triangular setoff” does not satisfy the Bankruptcy Code’s mutuality requirement and that the Bankruptcy Code’s safe-harbor provisions do not eliminate that requirement in connection with setoffs under financial contracts.
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Another blow to triangular setoff in bankruptcy: “synthetic mutuality” no substitute for the real thing
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Bosch & Siemens Home Appliances Group