header-logo header-logo

The case for set-off (Pt I)

06 February 2015 / Simon Duncan
Issue: 7639 / Categories: Features , Commercial
printer mail-detail
duncan

In the first article of a two-part series Simon Duncan reviews the legal basis for a bank to apply insolvency set-off

Set-off is the right of a debtor, himself owed money by his creditor, to effectively secure payment of the debt to him by setting it off against his own liability. In swaps mis-selling claims against banks, banks frequently set-off the company’s debt to the bank against damages or redress payments that the bank owes to the company where the company has gone into liquidation.

In the first part of this two-part article I review the legal basis for a bank to apply insolvency set-off in the following scenario. A bank (“B”) is owed £500,000 on an overdraft advanced to company (“A”). A has since gone into insolvent liquidation.

A (acting by its liquidator) sues B for the mis-selling of an interest rate swap and is awarded £500,000 or is offered the same sum as redress out of court. B then applies statutory insolvency set off pursuant to Insolvency Rule 4.90.

If you are not a subscriber, subscribe now to read this content
If you are already a subscriber sign in
...or Register for two weeks' free access to subscriber content

MOVERS & SHAKERS

Cadwalader—Andro Atlaga

Cadwalader—Andro Atlaga

Firm strengthens leveraged finance team with London partner hire

Mourant—Stephen Alexander

Mourant—Stephen Alexander

Jersey litigation lead appointed to global STEP Council

mfg Solicitors—nine trainees

mfg Solicitors—nine trainees

Firm invests in future talent with new training cohort

NEWS
The Supreme Court issued a landmark judgment in July that overturned the convictions of Tom Hayes and Carlo Palombo, once poster boys of the Libor and Euribor scandal. In NLJ this week, Neil Swift of Peters & Peters considers what the ruling means for financial law enforcement
Charles Pigott of Mills & Reeve reports on Haynes v Thomson, the first judicial application of the Supreme Court’s For Women Scotland ruling in a discrimination claim, in this week's NLJ
Small law firms want to embrace technology but feel lost in a maze of jargon, costs and compliance fears, writes Aisling O’Connell of the Solicitors Regulation Authority in this week's NLJ
Bea Rossetto of the National Pro Bono Centre makes the case for ‘General Practice Pro Bono’—using core legal skills to deliver life-changing support, without the need for niche expertise—in this week's NLJ
Charlie Mercer and Astrid Gillam of Stewarts crunch the numbers on civil fraud claims in the English courts, in this week's NLJ. New data shows civil fraud claims rising steadily since 2014, with the King’s Bench Division overtaking the Commercial Court as the forum of choice for lower-value disputes
back-to-top-scroll