Close-out compensation differs from novation offsetting in that it covers all outstanding obligations of the party under a framework contract similar to that used by ISDA. Traditionally, they only work in the event of default or insolvency. In the event of bankruptcy of the counterparty or any other relevant default indicated in the agreement in question when it is accelerated (i.e. executed), all transactions or transactions of a particular type shall be offset at market value or, if the contract indicates otherwise or where it is not possible to obtain a market value, the amount of damage suffered by the non-defaulting party when replacing the contract in question. The alternative would allow the liquidator to choose which contracts should be applied or not (and therefore perhaps “raisin pecking”).