HRS §431:15-319
When debts can be offset in an insurance liquidation
In an insurance company liquidation, if the company owes you money and you owe it money, the two amounts are combined and only the difference is paid or collected. But this rule does not apply in certain situations, like if you bought the debt just to use it as an offset, or if you owe premiums or capital contributions.
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The statute, as written — Setoffs and counterclaims
(a) Mutual debts or mutual credits between the insurer and another person in connection with any action or proceeding under this article shall be set off and the balance only shall be allowed or paid, except as provided in subsection (b) and section 431:15-323. (b) No setoff or counterclaim shall be allowed in favor of any person where: (1) The obligation of the insurer to the person would not at the date of the filing of a petition for liquidation entitle the person to share as a claimant in the assets of the insurer; (2) The obligation of the insurer to the person was purchased by or transferred to the person with a view to its being used as a setoff; (3) The obligation of the person is to pay an assessment levied against the members or subscribers of the insurer, or is to pay a balance upon a subscription to the capital stock of the insurer, or is in any other way in the nature of a capital contribution; or (4) The obligation of the person is to pay premiums whether earned or unearned, to the insurer.
LawTrove is not legal advice. The summary above is a computer-generated restatement — the authoritative text is the official version linked above.