enforce is a debt owed to a separate corporation you didn't have to set up the subsidiary but you did you didn't have to run it through the subsidiary but you did you could acetylene or given a lien for  the subsidiary to hold against the accounts receivable but she didn't you did what you did you set it up in fact that was struck by the opening line of your pair of your brief which was this is this was arranged between sophisticated parties indeed so why having multiple ways that you could have had what would clearly be ace a mutual set off between two parties why you why having chosen to put a rd party in the mix should we be paying attention when you say bilateral garfinkel you're going around i think you're going around the question a little bit i understand why you're doing it but the payment only gets a mckesson after it goes through n p r s say right i mean you don't get you don't get money directly from them under any contract you get money as potentially a set off because of what n p r say is god no no your honor both well you have a how how is it how is it both except for your claim that what it comes to our affiliate we have some right to is well that's your that's the contract language you lean on but there's  arrangement outside of the bankruptcy code itself that the captain is has taken over the role as as a creditor because under state law including the prudential decision from the california supreme everybody understands that and it speaks in terms of mutuality it only speaks to mutual debt oh and by such creditor to the to the debtor there's not a mutual claim component to five  mckesson corporation had an forcible obligation as against the rx to retain the six million nine hundred thousand dollars that gives rise to a claim that claim was a certain the bankruptcy case claim to this money this this money you're saying it's got a claim to that's the whole issue here i mean nobody's confused i don't think about you know whether you it's possible for m claim the question is can it characterize what it claims as a set off right as a claim in its own right and all of the law that i've been looking at in the set off contacts as parties who have a bilateral relationship and a bear and one is own money and the other is own money and they can set up and they can do some setting off instead of trading it's a very limited thing now without take us into the definition of payment in the supreme court law stick with us on the way the  here right so authority in this context i mean do you have case law statute regulation anything like that all right now to talk to us about that this circuit case because i understood your opponents to be saying look that supports their side it doesn't undercut because of the the framing of the the banks relationships explain to us why they're wrong and why you're right some crude crude cites united scientists united science is dealt with a bank that had a contract with a debtor united sciences and it also that that debtor had a number of purchasers who rescinded contracts for which the debtor owed money the agreement between united s and the debtor allowed for set off of the amount owed to credit card rescinding purchasers that did and the rd certain the th circuit said in the absence of an agreement that would be an improper triangular set up of a set up right sale that is on all fours with where we are in this case we have an agreement this is not in proper triangular set off we have an agreement the debtors in this and the and the captain agree to this and it's an forceful and under california law under the prudential decision oh if that's the case and my my quick look at that sent crude and lehmann brothers and the cases that have followed on arguably is that when you've got two parties together it's not going to be a harm to the rest of the world if they have a set up but when you start adding other parties what you really have are silently and those silent liens don't give the world notice and so you should not allow set offs in those circumstances just as a policy matter if we assume that the th circuit spoke the way you say why wouldn't why would we want to follow off rights the question is is the thing you've got a set off right and you're claiming it is and your opponent is saying it's not because the strangler so they've got no set off right so that's what that's what i'm trying to get at my think judge so speak for but i think we're all interested to hear exactly explain why it's a policy matter it would be good for the system to say you know what it's ok it's in fact it's a it's a good thing if there are other party set there that nobody else knows about because there are some contracts some places in california it's good for the system if those sort of silent liens are out there why would we do if it's good for the system in ten terms it promoting economic efficiency between address your question go to jordan as a policy matter anyone that is lending or considering lending on accounts receivable must understand that the counter party has the senses that count receivable this is a point that was raised in the here we're having a technical issue i'm sorry we just missed i don't know whether you froze for everybody else but i think we sort of lost your last sentence or at least i did mister garfinkel so  considering the account receivable as it as a part of their collateral take that subject to all d the defenses of an account debtor those defenses could be whatever they need including set up so no one is relying upon on a secret lien here and that's the point i was getting this is a simple right of payment also a contractual defense to the county all right thanks very much mistrusting we'll have you back for your actually it's not a case that presents any tension between our position and what the th circuit decided in the united sciences the arrangement was between three parties it was a triangular situation two of them were banks one was the merchant account thing which had a written agreement with the debtor who sold goods that the credit card receipts that were received from customers would be a two meanwhile same better at an obligation to the issuing bank of the credit cards to pay charged minutes that's whenever a customer returns the goods and files a credit however the triangle was collapsed by the why shouldn't we look here to the expectation of the parties that this set off would work that way and you know it as as they've alleged and and then put into motion mckesson actually putting know in this case i guess i have two responses to that one is that these sophisticated parties did know how to contract and if there had been an obligation  folks are doing by leaving m t l e a s seven crude misplaced mister murphy because in that in that instance you had two sets of affiliated entities they'd mister garfinkel says hey people know all the time that there can be defenses to try to attach accounts receivable pretty pretty straightforward that is that as counsel noted the triangle was open and debtor side rather than the creditors side some group we have the lehman decision where the triangle goes the other way and not surprisingly i would suggest where the topic is contracted between two entities mckesson could have received a direct payment but they did now let me talk about expectations from the creditor side it's like why i'm still notes under a one hundred and sixty five million dollar  of of this company or most sadly there were tens of millions of dollars of junior debt this one might do the math the seven million dollars month even if it's only a majority wasn't enough to support this debt i can assure you that while creditors do a lean search predators look for public security interests they would not expect nor nor would it be equitable or consistent with bankruptcy code most importantly for them to have to be isn't the other concessions you made why isn't that just a question of state law it's california law what is the context of an agreement framed in these terms allowing the cast in to assert the right to be  property interest the holding in butner is where either two things as the case state law would apply one would be that there was no congressional command in the words of the decision that is congress had not addressed the matter i if it fits within the limitations of section five hundred and fifty three which this one does for the reasons we've discussed the term neutrality in the phrase such creditor in the two places it appears the other decisions following the more recent decisions bankruptcy there where there is and bankruptcy in that case there was no indication congress intended to alter state law here they're playing the i think that's indisputable they're also let me court court's determination and the customer is not entitled to set off its review for abuse of discretion that's how you frame it in your brief but both the sides that appear to agree that what we're dealing with here is a pure question discretion if for example there was no or the bankruptcy court still its decision still could be supported by its equitable its view of the technical purpose of a limitation on sense to preserve equality of treatment in this court's own decision well if we got passed if we got past neutrality wouldn't you say you have a pretty hard list because here you had a wreck sich operate to a wholly owned subsidiary but the contractual provision is clear isabelle those parties knew exactly what they were doing anorexics in expected there was going to be said office it's only the intervention of the bankruptcy code that causes them difficulty it is this issue of triangulation i mean wouldn't that it's in fact be an abuse of discretion for the for the bankruptcy court to look at this arrangement very clear on its face and say you know as an equitable matter even though you parties knew exactly what you're doing and not enforcing it that's not problematic you don't think it would be an unlikely path of reasoning that gets to  core the bankruptcy code does not affect the right of a party to set off its state law right of set off had a rescue guess not and the question is are you the party entitled to settle that's what we're arguing not it's not whether there is a set off it's whether you get to set it all yes the answer to that is an affirmative yes had a record did not file bankruptcy as judge  bigger the variances in state law as to and as to allow ability of claims and that's what butner teaches it follows the raleigh and it follows again into the rodriguez case which focuses on lack of the services agreement under the services agreement who is owed the debt under the services agreement that n p r s has a coin under the distribution agreement  mckesson have the coin and we're only focused right now on the distribution agreement and the bilateral nature of that claim there you go that's that's what makes this