Article 107 - Mutual credit and set-off
(1) Subject to Article 107(5) this Article applies where, before the
Company goes into Liquidation, there have been mutual credits, mutual debts or other mutual dealings between the Company and any creditor of the Company proving or claiming to prove for a debt in the Liquidation.
(2) An account shall be taken of what is due from each party to the other in respect of the mutual dealings, and the sums due from one party shall be set off against the sums due from the other.
(3) Sums due from the
Company to another party shall not be taken into account under Article 107(2) if:
(A) that other party had notice at the time they became due that a meeting of creditors had been summoned under Article 71 or (as the case may be) an application for the winding up of the
Company was pending;
Liquidation was immediately preceded by an administration and the sums became due during the administration; or
Liquidation was immediately preceded by an administration and the other party had notice at the time that the sums became due that:
(i) an application for an
Administration Order was pending; or
(ii) any person had given notice of intention to appoint an
(4) Only the balance (if any) of the account is provable in the
Liquidation. Alternatively (as the case may be) the amount shall be paid to the Liquidator as part of the assets.
(5) Where, before the
Company goes into Liquidation, contractual set-off or netting arrangements have been entered into between the Company and any creditor of the Company, those arrangements shall apply in preference to the provisions of Article 107(1) to (4), except where such set-off or netting arrangements would be considered transactions at an undervalue under Article 142 or preferences under Article 143.