Section 526. Mutual credit and set off

(1) This section applies where before the commencement of the winding up there have been mutual credits, mutual debts or other mutual dealings between the company and any of the company’s creditor proving or claiming to prove for a winding up of debts.

(2) An account shall be taken of what is due from each party to the other in respect of the mutual dealings and the sums due from one party shall be set off against the sums due from the other.

(3) Sums due from the company to another party shall not be included in the account taken under subsection (2) if that other party had notice at the time the sums owed became due that a meeting of creditors has been summoned or a petition for the winding up of the company was pending.