SETOFF AGAINST A DEPOSITOR FACING BANKRUPTCY - A QUESTION OF TIMING

The Bankruptcy Code provisions affecting the bank's right to make a pr epetition setoff against a borrower's deposit balance are explained. T he author provides bankers with a prepetition strategy that will help them to decide whether to delay setoff until after bankruptcy is filed . The author also explains what steps should be taken if the setoff ri ght remains unexercised after bankruptcy commences.