No Safe Harbor Protection for Triangular Setoff Under Swap Agreement

, Delaware Business Court Insider

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Does the Bankruptcy Code allow for triangular setoffs in swap and repurchase agreements after commencement of the debtor's bankruptcy case? In Sass v. Barclays Bank (In re American Home Mortgage Holdings), Adv. Proc. No. 11-51851 (CSS) (Del. Bankr. Nov. 8, 2013), the court held that the Bankruptcy Code does not allow parties to set off non-mutual obligations, regardless of whether the agreements are subject to the safe harbor provisions of 11 U.S.C. §§ 559-661.

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