With no explanation, chose the best option from "A", "B", "C" or "D". or circular litigation, the Court will reconcile the amounts' owing on both sides in the context of the Debtors’ claim objection. The Court interprets Count Four as seeking to assert a right of recoupment in defense of the claim asserted by Morris through its Proofs of Claim. Section 558 of the Bankruptcy Code provides: The estate shall have the benefit of any defense available to the debtor as against any entity other than the estate, including statute of limitations, statutes of frauds, usury, and other personal defenses. A waiver of any such defense by the debtor after the commencement of the case does not bind the estate. 11 U.S.C. § 558 (2003). Courts have held that § 558 preserves to the Debtor defenses it would have had prepetition. In re PSA, Inc., 277 B.R. 51 (Bankr.D.Del.2002)(<HOLDING>); In re Papercraft, 127 B.R. 346

A: holding that the secured partys contract and quasicontract claims fail as a matter of law because they are subject to the buyers ucc defenses and its right to recoupment and setoff under the agreements between the buyer and the debtor
B: holding that sale of accounts receivable under section 363 was not free and clear of defenses such as recoupment but was free and clear of setoff rights unless the setoff was actually taken prepetition
C: holding that the debtors deposit of funds was not in the ordinary course of business and was for the purpose of creating a setoff right for the bank
D: holding that debtor under  558 was entitled to exercise state law right of setoff
D.