Play video

Contemporaneous Exchanges for New Value

Learn about the rule that even a transfer meeting the general elements of a preference may not be avoidable if it is part of a contemporaneous exchange for new value.


As we've learned, if a transfer satisfies the general elements of a preference, then the trustee or debtor-in-possession may typically avoid the transfer and recover it for the estate's benefit. But the estate can't avoid the transfer, insofar as the recipient creditor has a defense to avoidance. One defense, which we'll discuss here, involves contemporaneous exchanges for new value.

I. New Value Defined

Before we delve into the particulars, let's define new value. New value includes money or...