Often yes; the Bankruptcy Act does not prohibit set-off across the board. You must, however, properly lodge your claim in the bankruptcy, failing which it cannot be set off against a claim of the debtor. Also excluded are set-off of your pre-bankruptcy claim against a claim that arose for the debtor only afterwards, and set-off of a claim you acquired from another person only after the declaration of bankruptcy. Where set-off does not work, you pay your debt to the trustee in full and receive only a share of the distribution on your own claim.
You supplied goods to a company and some invoices went unpaid. At the same time you owe it money, for rent or services, say. The company is now in bankruptcy and the trustee is calling on you to pay your debt. Outside bankruptcy you would simply set the mutual claims off against each other. In bankruptcy stricter rules apply: the debtor’s debtors must perform its claims to the trustee (Section 44(3) of Act No. 7/2005 Coll.) and lodged claims are as a rule satisfied only through the distribution of proceeds (Section 44(4)). Set-off is therefore often a creditor’s only route to using its own claim in full, and the Act permits it on conditions that must be met in time.
Set-off is permitted unless the Act expressly excludes it
The Bankruptcy and Restructuring Act lists the cases in which set-off is not possible and says of all the others that set-off of other claims is not excluded (Section 54(5)). Alongside the bankruptcy restrictions, the ordinary conditions for set-off under the Civil Code or the Commercial Code must also be met, in particular mutuality, performance of the same kind and eligibility of the claims for set-off; we examine these in the question on unilateral set-off. In commercial relationships, the creditor is assisted by the rule that a claim not yet due may be set off against a due claim where it is a claim against a debtor unable to meet its monetary obligations (Section 359 of the Commercial Code).
Without lodging the claim, set-off will not work
The most common mistake is to rely on set-off and not lodge the claim in the bankruptcy at all, on the basis that “it is settled anyway”. The Act is unambiguous on this:
A claim not lodged in the manner prescribed by this Act, a lodged claim acquired by transfer or succession after the declaration of bankruptcy, and a claim acquired under a voidable legal act may not be set off against any claim of the debtor.
— Section 54(2) of Act No. 7/2005 Coll. (unofficial English translation)
The claim is lodged electronically into the trustee’s electronic mailbox within the basic lodgement period of 45 days from the declaration of bankruptcy (Section 28(2)). A late lodgement is taken into account, but the creditor may not exercise voting and other rights attaching to the claim (Section 28(3)). Whether a claim lodged after the basic period suffices for set-off is not expressly addressed by the Act, so lodge the claim within the basic period. The procedure is described in the question on how and by when to lodge a claim in bankruptcy.
The same sentence also closes off the workaround in which someone buys a claim against the debtor cheaply after the declaration of bankruptcy and sets it off against their own debt to it. A contractual ban on assigning claims against the debtor is ineffective during the bankruptcy (Section 55), so such claims may be sold, but the acquirer cannot use them for set-off.
When set-off is excluded even for a lodged claim
- A claim that arose for you before the declaration of bankruptcy may not be set off against a claim that arose for the debtor after the declaration (Section 54(1)). If you continue trading with the company and buy goods from the trustee, for instance, you pay the price in full.
- The same applies to contingent claims asserted in bankruptcy by lodgement (Section 54(1)).
- No claim may be set off against a claim arising from liability for failure to file a bankruptcy petition (Section 54(3)), and a separate prohibition applies to related-party claims (Section 54(4)).
What matters is therefore the moment each of the two claims arose, not the date of the invoice. Under long-term contracts where performance straddled the date of the declaration of bankruptcy, the mutual claims must be split into the period before and the period after it.
How to proceed
Set-off is effected by a declaration directed at set-off which one party makes to the other (Section 580 of the Civil Code). On the declaration of bankruptcy, the power to act for the debtor in matters of assets subject to the bankruptcy passes to the trustee (Section 44(1)), so address the declaration to the trustee. State both claims precisely, their amounts and a reference to your lodgement, and keep proof of delivery. If the trustee does not accept the set-off and pursues the whole debt against you, the court will decide on the effectiveness of the set-off.
Whether set-off will stand in your case is something we review as part of our assignment and set-off of receivables service, and we prepare the lodgement as part of lodging a claim in bankruptcy. Send us the order declaring bankruptcy, the invoices from both sides and the trustee’s demand. The lodgement period runs from the declaration of bankruptcy.
This answer provides general information on the law as at 12 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
