§ 553

In re Moore

Movant creditor, a credit union, sought relief from stay per 11 U.S.C. § 362 or dismissal relative to a voluntary chapter 13 case filed by debtors, a married couple. Specifically at issue was whether the creditor was entitled to relief from stay to exercise an alleged right of setoff per 11 U.S.C. § 553(a) against debtor wife's separate savings account, by which to recoup liabilities arising by reason of debtors' joint checking account.
Ruling: 
Creditor not entitled to relief from stay to exercise alleged right of setoff against debtor spouse's savings account.
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Consumer case opionion summary, case decided on October 05,2007, LexisNexis #1207-012

In re Bergman

Before the court in a chapter 12 case was the motion of a claimant for relief from automatic stay.
Ruling: 
Creditors not entitled to setoff without establishing pre-existing right or that it owed an enforceable prepetition debt to debtor.
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Consumer case opionion summary, case decided on September 10,2007, LexisNexis #1007-081

Brown & Cole Stores LLC v. Associated Grocers Inc. (In re Brown & Cole Stores LLC)

Appellee creditor claimed administrative priority under 11 U.S.C. § 503(b)(9) for the value of goods received by appellant bankruptcy debtor, a grocery store chain, within 20 days of the debtor's bankruptcy, and the debtor claimed a right of setoff under 11 U.S.C. § 553(a). The debtor appealed the judgment of the Bankruptcy Court for the Western District of Washington which allowed the administrative claim and denied setoff.
Ruling: 
Administrative priority claim which arose prepetition was subject to setoff.
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Commercial case opionion summary, case decided on August 17,2007, LexisNexis #1007-115

Jahn v. U.S. Xpress Inc. (In re Transcommunications Inc.)

Plaintiff bankruptcy trustee brought an adversary proceeding against defendant creditor, alleging that a lack of payment by the creditor for the debtor's telecommunications services during the 90 days prior to the debtor's bankruptcy petition constituted a setoff which was avoidable by the trustee pursuant to 11 U.S.C. § 553. The bankruptcy court conducted a trial.
Ruling: 
Payments withheld by creditor for debtor's telephone services were not avoidable to the extent they consituted a setoff for overcharges.
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In re Robinson

Movant chapter 13 debtor objected to the amended claim submitted by claimant IRS. The debtor moved to keep her income tax refunds for two taxable years notwithstanding the IRS'claim that it had a right to set off the refunds against prepetition tax liability. The IRS objected to the motion.
Ruling: 
Court ruled that IRS had right to offset mutual debt related to debtor's prepetition tax liability and rejected argument that plan confirmation extinguished this setoff right.
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In re Delta Air Lines Inc.

Creditor, a municipal aviation authority, brought a motion for relief from the automatic stay in order to set off under 11 U.S.C. § 553 certain credits in favor of the debtors, an airline and its subsidiaries, against rejection damages under 11 U.S.C. §§ 365(g) and 502(g) stemming from a lease with the aviation authority which the debtors rejected.
Ruling: 
Motion for setoff was denied since rejection damages under sections 365(g) and 502(g), which arose after filing, could not be set off against a prepetition claim.
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In re Garden Ridge Corp.

Before the court in a chapter 11 matter was the motion, by a terminated employee of debtors'management services affiliate, for relief from the automatic stay under 11 U.S.C. § 362(d) to the extent necessary to set off certain amounts owing from and owed to debtors.
Ruling: 
Former employee of the debtor was denied relief from the automatic stay to effectuate a setoff since the debts in question were not mutual and thus could not be set off.
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In re Rocor Intl Inc.

A bankruptcy debtor was entitled to refunds for overpaid excise taxes on fuel, but the IRS retained the refunds as a setoff against excise taxes due for heavy vehicle highway use. The liquidation estate of the debtor moved for turnover of the refunds, and the IRS moved for summary judgment.
Ruling: 
Setoff was inappropriate where IRS applied postpetition tax refunds to prepetition tax liability.
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In re Coastal Bus & Equip. Sales Inc.

Creditor IRS moved for relief from the automatic stay to setoff pre-petition tax overpayments of the debtor against its unpaid tax liabilities incurred during the pendency of its chapter 11 case, including withholding, Federal Insurance Contributions Act ("FICA"), and Federal Unemployment Tax Act taxes.
Ruling: 
IRS was granted right to apply prepetition tax liability refunds against unpaid postpetition tax liability incurred during the debtor's chapter 11 case under a right of recoupment.
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U.S. Aeroteam Inc. v. Delphi Automotive Systems LLC (In re United States Aeroteam)

Plaintiff debtor filed for bankruptcy. Defendant creditor filed a motion for relief from the automatic stay in order to exercise a right to setoff under 11 U.S.C. § 553. Plaintiff assignee joined in the action to determine whether its security interest in the debtor's accounts receivable affected the right to setoff. Both the debtor and the creditor filed motions for summary judgment.
Ruling: 
Creditor found to have setoff rights for debt owed more than 90 days before filing, but trial was required to determine creditor's setoff rights for debt owed during 90 days prior to filing.
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