Q&As

In the context of an insolvency set-off where a landlord is owed money for the payment of rent by a company, can this sum be set off against money owed to the company by the landlord from an overdrawn loan account?

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Published on LexisPSL on 20/07/2018

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • In the context of an insolvency set-off where a landlord is owed money for the payment of rent by a company, can this sum be set off against money owed to the company by the landlord from an overdrawn loan account?

In answering this Q&A we have assumed that it is the company and not the landlord/director—that is in an insolvency process.

The rules relating to liquidation set-off and administration set-off are contained in the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 whereas the rules of bankruptcy set-off are found in the Insolvency Act 1986 (IA 1986). Insolvency set-off is self-executing, automatic and mandatory. Therefore, it cannot be contracted out by the parties involved or its operation waived. Insolvency set-off further takes precedence over any other form of set-off exercised before the liquidation, administration or bankruptcy and an office-holder is bound to apply the rules of set-off as part of the exercise of their discretion. In terms of liquidation, the relevant set-off date for the taking of the account is the date when the company enters liquidation and for administration set-off the relevant date is when the administrator has provided notice that they intend to make a distribution to the creditors.

In order to be set-off, the claims must meet a num

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