Nice explanation of the difference between recoupment and set off from the 9th Circuit.

In re Gardens Regional Hospital and Medical Center, Inc.  975 F.3d 926 (9th Cir. September, 2020)

Historically, “[s]etoff allowed a reduction of [the] plaintiff’s claim by the amount of a liquidated claim of the plaintiff to the defendant; recoupment allowed a defendant to assert a claim arising out of the same transaction as the plaintiff’s claim.”  “The defining characteristic of setoff—as opposed to recoupment—is that, in a setoff, ‘the mutual debt and claim . . . are generally those arising from different transactions.’” [emphasis in original]   “[R]ecoupment is not the adjustment of separate mutual debts but the process of defining the amount owed under a single claim.”  “[R]ecoupment is in the nature of a right to reduce the amount of a claim, and does not involve establishing the existence of independent obligations.”  But “courts should apply the recoupment doctrine in bankruptcy cases only when ‘it would . . . be inequitable for the debtor to enjoy the benefits of that transaction without meeting its obligations.’”

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