Insolvency set off dates back to the statue of Queen Anne, designed to do substantial justice between creditors and insolvent individuals or companies.
In Forster v Wilson  152 ER 1165… Parke B said:
“the purpose of insolvency set off was to do substantial justice between the parties …. ” Although it is often said that the justice of the rule is obvious..”
That means, without this critical scheme of law, creditors or insolvents, or those alleged to be insolvent, suffer fraud and injustice.
We exposed the common synergy across several high profile corporate and personal insolvency cases and we release this short article in the public interest following Intelligence UK International’s covert investigation into serious corruption by the judiciary.
Insolvency practitioners, judges and lawyers have been abusing their positions, acting dishonestly to defraud innocent businesses and individuals of their assets by depriving them of the long established statutory insolvency set off rights.
Stein v Blake  UKHL 11 – The House of Lords final decision in relation to insolvency set off
In Stein v Blake  UKHL 11, the House of Lords, now the Supreme Court, the highest court of England & Wales, the law and administration of statutory insolvency set off was finally determined.
Summarising the issues Lord Hoffman said:
“If A and B have mutual claims against each other and A becomes bankrupt, does A’s claim against B continue to exist so that A’s trustee can assign it to a third party? Or is the effect of section 323 of the Insolvency Act 1986 to extinguish the claims of A and B and to substitute a claim for the net balance owing after setting off the one against the other? And if the latter is the case, can the trustee assign the net balance (if any) before it has been ascertained by the taking of an account between himself and B? If yes, is that what the trustee in this case has done? These are the issues in this appeal”
Lord Hoffman gave a long and careful exposition of the law relating to both procedural and insolvency set-off as it had developed from the time of Queen Anne. He noted that whilst procedural set-off required the claims to be a definite amount at the time the claims merged into a cause of action by way of issuing legal proceedings, insolvency set-off was not so limited. It was possible to set-off claims which were unliquidated, future or subject to contingencies under the insolvency set-off regime.
Bresco Electrical Services v Lonsdale  – The Supreme Court’s final decision in respect of insolvency set off
More recently in Bresco Electrical Services v Lonsdale  the Supreme Court made critical observations at paragraphs 27 – 34 of the judgment in relation to insolvency set off in context with corporate insolvency under rule 14.25 of the Insolvency Rules 2016, setting off claims which arise through mutual dealings.
At paragraph 29 of the Bresco judgment, the Court summarised:
“…the statutory regime for set-off in insolvency, now to be found in IR 14.25 operates upon an altogether more comprehensive and rigorous basis. First, it applies to every type of pre-liquidation mutual dealing, and also to secured, contingent and future debts: see IR 14.25(1),(2), (6) and (7). Secondly, whereas legal or equitable set-off is essentially optional, taking effect only if the cross-claim is pleaded as a defence to the claim, insolvency set-off is mandatory, and takes effect upon the commencement of the insolvency (the “cut-off date”). It is said to be self-executing, and for some purposes the original cross-claims are replaced by a single claim for the balance: see IR 14.25(3) and (4)“
What is insolvency set off and when does it apply?
Insolvency set off applies to every pre-liquidation or pre-bankruptcy mutual dealing where there are claims arising between a creditor, or one claiming to prove, and the insolvent (business or individual).
When a creditor seeks to claim in a petition, whether as the petitioning creditor or one claiming to prove, statutory law on set off becomes effective and is mandatory where there are mutual claims arising through pre-insolvency dealings.
Creditors and insolvents are entitled to the right of statutory insolvency set off. The scheme of law in section 323 of the Insolvency Act 1986 applicable to insolvent individuals, or rule 14.25 of the Insolvency Rules 2016 for businesses.
In Stein v Blake the House of Lords finally determined that
“The taking of the account really means no more than the calculation of the balance due in accordance with the principles of insolvency law. An obvious occasion for making this calculation will be the lodging of a proof by a creditor against whom the bankrupt had a cross-claim. Indeed, it might have been thought from the words “any creditor of the bankrupt proving or claiming to prove for a bankruptcy debt” in section 323(1) that the operation of the section actually depended upon the lodging of a proof. But it has long been held that this is unnecessary and that the words should be construed to mean “any creditor of the bankrupt who (apart from section 323) would have been entitled to prove for a bankruptcy debt.” Thus the account to which section 323(2) refers may also be taken in an action by the trustee against a creditor who, because his cross-claim does not exceed that of the trustee, has not lodged a proof…
Abuse of one’s power by deliberately failing to administer law to cause loss or make a gain is a fraud
Consequentially, many of the UK’s judges, insolvency lawyers and practitioners are not your friends, they are cheaters who are out to deprive you of your rights, to make a gain and to cause loss by effectual fraudulent abuse of position.
Knowledge is power as they say, and now that you know the law in question, why its there and what it does, we would hope that we prevent others from being defrauded in the same way.
If you, or anyone you know as suffered abuse at the hands of the UK judiciary, lawyers or insolvency practitioners abusing their positions, get in touch with us today, we may be able to investigate and come up with the material you need to turn it all around.
Fraud unravels all, even post judgment.
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