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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.

Transcript

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...

Lessons

    • 1. Welcome to Bankruptcy
    2. Foundations of Bankruptcy
    3. The Estate and the Automatic Stay
    4. Creditors, Claims, Discharge, and Priority
    5. Chapter 7 Liquidation
    • Chapter 7 Panel Trustee
    • Distribution of Estate Property in Chapter 7
    • Discharge in Chapter 7
    • Personal-Property Collateral in Chapter 7
    • General Grounds to Dismiss a Chapter 7 Case
    • Introduction to the Means Test and Dismissals or Conversions for Abuse
    6. Debt Adjustment in Chapter 13
    • Eligibility to File for Chapter 13
    • The Estate in Chapter 13
    • Introduction to the Chapter 13 Plan of Debt Adjustment
    • Terms Permitted in a Chapter 13 Plan
    • Chapter 13 Confirmation Requirements: Treatment of Secured Claims
    • Chapter 13 Confirmation Requirements: Treatment of Unsecured and Priority Claims
    7. Preferences
    • Introduction to Preferences
    • A Transfer to a Creditor or for a Creditor's Benefit Made for or on Account of an Antecedent Debt
    • A Transfer Enabling a Creditor to Receive More Than It Would in Chapter 7
    • The Net-Benefit Rule
    • Contemporaneous Exchanges for New Value
    • Transfers in the Ordinary Course of Business
    • Subsequent New Value