Thursday, October 27, 2011
How do I Make a “New Value” Defense?
The “new value” defense has two factors which must be proven. First, new value must have been given by the creditor after the debtor received the alleged preferential payment. Second, the creditor must not have received any other payment in exchange for the new value given. The “new value” given can be provision of goods or services or anything else that creates value for the debtor’s business.
In a recent U.S. Bankruptcy Court case, the court followed the majority of circuits in holding that an otherwise preferential payment used to pay antecedent debt may be shielded by subsequently advanced new value. In so holding, the court addressed issues related to the availability and terms of credit for businesses nearing insolvency. There are still certain legal issues regarding the new value defense that have not been resolved in all circuits. If we can help you defend a preference claim, please give us a call. Thanks for sending a copy of SenneySays to your to your friends.
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