11 U.S.C. § 553 : US Code - Section 553: Setoff

Search 11 U.S.C. § 553 : US Code - Section 553: Setoff

(a) Except as otherwise provided in this section and in sections
362 and 363 of this title, this title does not affect any right of
a creditor to offset a mutual debt owing by such creditor to the
debtor that arose before the commencement of the case under this
title against a claim of such creditor against the debtor that
arose before the commencement of the case, except to the extent
that -
(1) the claim of such creditor against the debtor is
disallowed;
(2) such claim was transferred, by an entity other than the
debtor, to such creditor -
(A) after the commencement of the case; or
(B)(i) after 90 days before the date of the filing of the
petition; and
(ii) while the debtor was insolvent (except for a setoff of a
kind described in section 362(b)(6), 362(b)(7), 362(b)(17),
362(b)(27), 555, 556, 559, 560, or 561); or
(3) the debt owed to the debtor by such creditor was incurred
by such creditor -
(A) after 90 days before the date of the filing of the
petition;
(B) while the debtor was insolvent; and
(C) for the purpose of obtaining a right of setoff against
the debtor (except for a setoff of a kind described in section
362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559,
560, or 561).
(b)(1) Except with respect to a setoff of a kind described in
section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556,
559, 560, 561, 365(h), 546(h), or 365(i)(2) of this title, if a
creditor offsets a mutual debt owing to the debtor against a claim
against the debtor on or within 90 days before the date of the
filing of the petition, then the trustee may recover from such
creditor the amount so offset to the extent that any insufficiency
on the date of such setoff is less than the insufficiency on the
later of -
(A) 90 days before the date of the filing of the petition; and
(B) the first date during the 90 days immediately preceding the
date of the filing of the petition on which there is an
insufficiency.
(2) In this subsection, "insufficiency" means amount, if any, by
which a claim against the debtor exceeds a mutual debt owing to the
debtor by the holder of such claim.
(c) For the purposes of this section, the debtor is presumed to
have been insolvent on and during the 90 days immediately preceding
the date of the filing of the petition.