Reprinted with permission from the February 2012 issue of Futures & Derivatives Law Report.
In the recent Lehman Brothers Inc. SIPA proceeding, Judge James Peck of the Bankruptcy Court for the Southern District of New York denied UBS AG's assertion of a triangular setoff right, despite the undisputed underlying contractual right of triangular setoff in the swap agreement between the parties, closing the door for triangular setoff in a bankruptcy under the Bankruptcy Code.
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