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 [1843] 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…
The legal duty of the insolvency courts to apply insolvency set off in all insolvency proceedings is mandatory and is said to be self-executing. Failure to apply set off when there are cross claims arising between a creditor and alleged bankrupt renders the proceeding…
