Research On Right Of Set-off In Bankruptcy

The right of set-off in Bankruptcy is a right of priority, which enables creditors to offsethis debts from bankrupt, whether the kind of debts are the same, the mutual debts encloseconditions or deadline for performance or maybe exercise in the near future or not. With thedevelopment of economy, the functions of the offset right in Bankruptcy have changed as thesecured function has become the most significant one. If Civil Law takes the offset aslawmaking which enable creditors to clean the slate, the objective of bankrupt offset is tomake sure one’s creditor’s rights can be satisfied.The right of set-off in Bankruptcy is the special use of the right of set-off in Civil Law inBankruptcy proceedings. It has many peculiarities in fields of functional significance, scopeof application and form elements. However, emphasizing the differences between bankruptoffset and civil offset doesn’t equal to admitting bankrupt offset is a new right established inBankruptcy. In contrast, the offset system in Bankruptcy is based on civil offset. We shouldtake the rule and legal principle in Civil Law owing to lack of clarity in Bankruptcy. Thisarticle is based on the combination of these two offset right, in order to clarify the basictheoretical issues in bankrupt offset.For the scope of application, bankrupt offset only applies to the offset between thecreditor’s right and debt own to the bankrupt. We should consider the scope of applicationfrom aspects of entity and procedure. In substantive, the scope of application of bankruptoffset right has expanded, meanwhile, also contracted. For expansion, creditor is able to claimhis offset right whether the kind of debts are the same, the mutual debts enclose conditions ordeadline for performance or maybe exercise in the near future or not. For contraction, theexecutor must be bound to statutory or agreed restrictions, natural restrictions, referral clauserestrictions and restrictions from principle of good faith. From the point of procedure, thescope of application of bankrupt offset right should be different according to the distinct typesof bankruptcy procedure.In practice, the right of set-off in Bankruptcy must exercise on the premise that thecreditor has declared his creditor’s right to trustee in Bankruptcy. Furthermore, only thecreditor in Bankruptcy can exercise the offset right, his offset claims must be express and putforward in legal terms. Meanwhile, the trustee in Bankruptcy has been endowed with a right to dissent.In the aspect of effectiveness, the bankrupt offset should have retrospective effect. Thedebtor-creditor relationship has been terminated since the offset right established. Since thetime when the offset right established is judged by the satisfied term of active credit, theeffect of bankrupt offset should come into force since the bankrupt creditor’s right is due.