A construction company owes ₹ 1 crore to a cement supplier. However, the cement supplier also owes ₹ 40 lakhs to the construction company for a separate warehousing contract.

₹ 40 lakhs receivables by the construction company from cement supplier can be used in liquidation subject to set off against ₹ 1 crore owes by the construction company to same cement supplier. Regulation 29 of IBBI (Liquidation Process) Regulations, 2016 provides that where there are mutual dealings between the corporate debtor and another party, the sums due from one party shall be set off against the sums due from the other to arrive at the net amount payable to the corporate debtor or to the other party.