Silence Is Not Forfeiture: Defensive Setoff Survives a Missed Bar Date

The ruling

On September 9, 2026, the U.S. Court of Appeals for the Second Circuit decided a dispute arising from the Chapter 11 case of SVB Financial Group. The court held that the FDIC's purely defensive setoff rights under California law were not “claims” within the Bankruptcy Code's definition and therefore did not require the FDIC to file a proof of claim.

The decision is narrow. It does not establish that creditors may generally ignore a bar date. A creditor seeking an affirmative distribution or other affirmative bankruptcy relief may still need to file a timely proof of claim and comply with the court's bar-date order.

Why the distinction matters

The court distinguished an affirmative right to payment from a defense that reduces or defeats the debtor's demand. Whether a right is properly characterized as setoff, recoupment, defense, or affirmative claim can turn on governing nonbankruptcy law and the specific posture of the dispute.

• Do not assume that every asserted setoff falls within the ruling.

• Review the bar-date order, the applicable state law, and the remedy actually being sought.

• Preserve proof-of-claim rights when there is any uncertainty; a later characterization dispute can be expensive and outcome-determinative.

Primary source

Second Circuit opinion, No. 25-567-bk (Sept. 9, 2026)

This article is for general informational purposes only. It is not legal, tax, accounting, or investment advice, does not create an attorney-client relationship, and should not be relied on for any specific matter. Laws, court orders, deadlines, and procedural rules can change and may vary by jurisdiction. Consult qualified counsel and other professional advisers about the facts of your matter.