In re American Home Mortgage: Triangular Setoff Again Disallowed under Bankruptcy Code | Practical Law
The US Bankruptcy Court for the District of Delaware ruled in Sass v. Barclays Bank PLC (In re American Home Mortgage Holdings, Inc.) that the mutuality requirement of section 553 of the Bankruptcy Code prohibits a creditor from using excess collateral it holds to set off a debt owed by the debtor to an affiliate of the creditor against its own obligations to the debtor.