By S&S Co. Advocates & Solicitors · Published 17 July 2026 · Informational content, not legal advice
About this article: A general explainer prepared by S&S Co. Advocates & Solicitors on a recurring type of dispute. It does not report a specific judgment or order, names no parties and gives no case citation, so it should not be cited as authority. Law and practice change; please verify against the current statute and primary sources before relying on it.
Master trading and derivatives-style agreements commonly provide that, on default or insolvency, the open positions are closed out and the amounts owed in each direction are netted to a single balance. Netting is different from an ordinary set-off, where a creditor deducts an unrelated debt owed by it to the debtor.
When a corporate insolvency resolution process begins, the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 restricts recovery actions against the corporate debtor and the disposal of its assets. A resolution professional may object that a counterparty's netting or set-off after admission is an adjustment against the debtor's assets. A counterparty will argue that, where all transactions were made under a single master agreement that treats them as one net obligation, netting only determines the true amount owed.
The Code does not contain a general netting safe harbour of the kind found in some other jurisdictions, and tribunals have approached set-off and netting claims case by case, with closer scrutiny of set-off between unrelated mutual debts. Outcomes depend on the agreement's wording and structure and on how the claim is presented.