Issue link: https://mbozikis.ufcontent.com/i/1422521
82 the same capacity." Id. at 393 (quoting Westinghouse Credit Corp. v. D'Urso, 278 F.3d 138, 149 (2d Cir. 2002)). From such a perspective, triangular setoff language cannot create mutuality. 40 Following the SemCrude decision, in In re Orexigen Therapeutics, Inc., the Third Circuit rejected a triangular setoff provision agreed to by the parties and affirmed its position that Section 553's mutuality requirement may not be negotiated around. See In re Orexigen Therapeutics, Inc., 990 F.3d 748, 757 (3d Cir. 2021). The Orexigen and SemCrude decisions demonstrate triangular setoffs will be rejected in the Third Circuit and may continue to meet with resistance in bankruptcy courts elsewhere, at least in the context of contracts not subject to the protections afforded by the Bankruptcy Code's safe harbor provisions. An exception to the general rule against triangular setoff does exist, however, where more than one agency of the Federal government is involved. Under the so-called "unitary creditor" theory, one Federal agency may be permitted to set off a claim against a debtor against an obligation owed to such debtor by a separate Federal agency. The rationale behind this exception is that because the Bankruptcy Code neither expands nor constricts the common law right of setoff but simply preserves whatever right exists outside bankruptcy, and because the Federal government is considered to be a single entity that can set off one agency's debt to a party against such party's obligation to another agency outside of bankruptcy, such rule also applies in bankruptcy. See U.S. v. Maxwell, 157 F.3d 1099, 1102 (7th Cir. 1998). 40 The creditor later filed a motion for reconsideration of the court's decision in In re SemCrude, L.P., arguing that the contracts at issue were "safe harbor" contracts and should thus be protected against any Section of the Bankruptcy Code, including Section 553, operating to limit the setoff provisions of such contracts. The court denied the creditor's motion on a procedural point, finding that the Bankruptcy Rules did not "permit reconsideration to allow a party a 'second bite at the apple' to assert grounds for recovery that could have been asserted in the first instance. In re SemCrude, L.P., No. 08-11525, Docket No. 3465 (Bankr. D. Del. Mar. 19, 2009).