# The Education Administration Rules 2018, Article 5.24: Mutual dealings and set-off


(1) This rule applies where the education administrator intends to make a distribution and has delivered a notice under rule 5.26.
(2) An account must be taken as at the date of the notice of what is due from the further education body and a creditor to each other in respect of their mutual dealings and the sums due from the one must be set off against the sums due from the other.
(3) If there is a balance owed to the creditor then only that balance is provable in the education administration.
(4) If there is a balance owed to the further education body that must be paid to the education administrator as part of the assets.
(5) However if all or part of the balance owed to the further education body results from a contingent or prospective debt owed by the creditor then the balance (or that part of it which results from the contingent or prospective debt) must be paid in full (without being discounted under rule 5.41) if and when that debt becomes due and payable.
(6) In this rule—
“obligation” means an obligation however arising, whether by virtue of an agreement, rule of law or otherwise; and
“mutual dealings” means mutual credits, mutual debts or other mutual dealings between the further education body and a creditor proving or claiming to prove for a debt in the education administration but does not include any of the following—
(a) a debt arising out of an obligation incurred after the further education body entered education administration;
(b) a debt arising out of an obligation incurred at a time when the creditor had notice that an application for an education administration order was pending;
(c) a debt which has been acquired by a creditor by assignment or otherwise, under an agreement between the creditor and another party where that agreement was entered into—
(i) after the further education body entered education administration, or
(ii) at a time when the creditor had notice that an application for an education administration order was pending.
(7) A sum must be treated as being due to or from the further education body for the purposes of paragraph (2) whether—
(a) it is payable at present or in the future;
(b) the obligation by virtue of which it is payable is certain or contingent; or
(c) its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.
(8) For the purposes of this rule—
(a) rule 5.14 applies to an obligation which, by reason of its being subject to a contingency or for any other reason, does not bear a certain value;
(b) rules 5.21 to 5.23 apply to sums due to the further education body which—
(i) are payable in a currency other that sterling,
(ii) are of a periodical nature, or
(iii) bear interest; and
(c) rule 5.41 applies to a sum due to or from the further education body which is payable in the future.

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Source: https://www.legislation.gov.uk/uksi/2018/1135/article/5.24 (the official version)
Page: https://openlegislation.uk/education-administration-rules-2018/article-5.24
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.