The Intersection Of Avoidance Actions And Setoff

November 15, 2016

Earlier this summer, the bankruptcy court in Delaware allowed a creditor to assert its allowed administrative expense priority claim as a setoff defense against the trustee’s preference claim. In re Quantum Foods LLC, 554 B.R. 729 (Bankr. D. Del. 2016). The decision, coming out of an influential bankruptcy court and addressing a question of first impression in Delaware, raises some interesting issues, which we briefly discuss below.

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