{"id":513,"date":"2009-11-05T13:21:07","date_gmt":"2009-11-05T13:21:07","guid":{"rendered":"https:\/\/nybankruptcy.net\/main\/?p=513"},"modified":"2018-11-28T08:54:13","modified_gmt":"2018-11-28T08:54:13","slug":"preference-actions-what-is-the-new-value-defense","status":"publish","type":"post","link":"https:\/\/nybankruptcy.net\/main\/preference-actions-what-is-the-new-value-defense\/","title":{"rendered":"Preference Actions: What is the “New Value” defense?"},"content":{"rendered":"
\"23_true-value\"
“New Value” Defense. Not “True Value.”<\/figcaption><\/figure>\n

In a previous post (\u201cDefenses to Preference Actions \u2013 Part I<\/a>\u201c), I explained that there are three common defenses to preference actions<\/a> (also often called \u201cpreference lawsuits\u201d) that you can use if you\u2019ve received a demand letter from a bankruptcy trustee, from counsel to a Debtor-In-Possession or counsel to a creditors committee.<\/p>\n

In subsequent posts I explained the \u201cOrdinary Course of Business\u201d Defense<\/a><\/strong> and the “Contemporaneous Exchange” Defense<\/a><\/strong>.\u00a0 Next I\u2019ll explain the\u2026<\/p>\n

“NEW VALUE” DEFENSE<\/h3>\n

The “New Value” Defense<\/strong> (also known as the “Subsequent Extension of New Value” Defense<\/strong>) is used in situations where a trade creditor was providing goods to a debtor (well, before the debtor was a debtor) on credit on a periodic basis and the debtor made a series of payments to the creditor during the preference period (i.e., the period of 90 days prior to the debtor’s bankruptcy filing).<\/p>\n

In other words, you deliver goods to your customer on several different days over the course of a month, and your customer gradually makes several different payments to you over the same period.\u00a0 And each delivery doesn’t necessarily match neatly up with each payment.\u00a0 Then the debtor files for bankruptcy, and a year later you get a letter from the trustee who is suspiciously eying those payments you received 90 days prior to your customer’s bankruptcy filing.<\/p>\n

The “New Value” Defense simply helps you make the argument that if you received a payment of $10,000 on November 1, and you had subsequently delivered $4,000 worth of goods on November 5, and your customer filed for bankruptcy on November 6, then the “preference payment” in dispute would be reduced to $6,000 rather than $10,000.<\/p>\n

Notably, in this situation you could still apply the “Ordinary Course of Business” Defense and dispute the $6,000 “preference payment” claim on that basis.<\/p>\n

Most trade relationships, of course, are not as simple as the one described above.\u00a0 There may be multiple transactions and deliveries of goods.\u00a0 And calculating the amount of the “new value” can be complicated, both mathematically and legally, as courts have differed in their interpretations.\u00a0 More on that in a future post.<\/p>\n

The key to defending yourself is to have an experienced bankruptcy lawyer, particularly one who knows the ins and outs of preference actions.\u00a0 Rosenberg Musso & Weiner’s<\/strong><\/a> experience both representing trustees and representing creditors against trustees gives us unique perspective on how to help our clients deal with preference actions.<\/p>\n

If you\u2019re facing a preference action in New York<\/strong> and need a skilled and experienced New York lawyer to help you navigate and figure out the best and most practical strategy, please feel free to contact me<\/a><\/strong> for a free initial consultation<\/strong>.<\/p>\n

Go to Bankruptcy Lawyer Brooklyn NY<\/a>\u00a0<\/em>t<\/em>o learn more about Rosenberg Musso & Weiner LLP<\/strong><\/a> and\/or to set up a free consultation.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

In a previous post (\u201cDefenses to Preference Actions \u2013 Part I\u201c), I explained that there are three common defenses to preference actions (also often called \u201cpreference lawsuits\u201d) that you can use if you\u2019ve received a demand letter from a bankruptcy trustee, from counsel to a Debtor-In-Possession or counsel to a creditors committee. In subsequent posts …<\/p>\n

Preference Actions: What is the “New Value” defense?<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-global-header-display":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":""},"categories":[16,22,31,7,58,36],"tags":[2,21,71,30,51,52,59,37,38],"acf":[],"yoast_head":"\nPreference Actions: What is the "New Value" defense?<\/title>\n<meta name=\"description\" content=\"The key to defending yourself is to have an experienced 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