Abstract

fiscal years and deducted the overpayment from its payments to H during that year. The fiscal year 2000 was also the year that H filed for Chapter 11. H filed an adversary proceeding against US contending that the deductions within four months before H's bankruptcy filing were voidable preferential transfers and that US's deductions after the bankruptcy filing were in violation of the automatic stay. The bankruptcy judge, the district court judge, and a unanimous appellate court panel looked to the law of recoupment to hold that US's reduction of payments was neither a preferential transfer nor a violation of the automatic stay. A short article discussing, inter alia, the First Circuit's opinion in In re Holyoke Nursing Home, Inc. concludes, "[o]ld issues continue to arise and be misunderstood .... " To understand these "old issues," we need to (l) understand the non-bankruptcy law origins of the doctrine of recoupment and the non-bankruptcy law differences between recoupment and setoff, (2) remember the language of the Bankruptcy Act of 1898 and the 1978 Bankruptcy Code and the bankruptcy law differences between recoupment and setoff, (3) review the reported opinions that distinguish recoupment in bankruptcy from non-bankruptcy recoupment, and (4) consider the role of transfer of property of the estate in preference law, the role of "equity" in bankruptcy and the role of state law in applying recoupment in bankruptcy.

Document Type

Article

Publication Date

2005

Comments

Coauthored with Jonathan A. Nockels

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