New Value Exception to 90 Day Preference Rule

New Value Exception to Preferential Transfer Rule

Section 547(c)(1) sets forth a “contemporaneous exchange for new value” exception to a trustee’s avoidance power under § 547(b) and provides that:
The trustee may not avoid under this section a transfer–
(1) to the extent such transfer was–
(A) intended by the debtor and the creditor to or for whose benefit such transfer was made to be a contemporaneous exchange for new value given to the debtor;
(B) in fact a substantially contemporaneous exchange.
Thus, to prevail on a contemporaneous exchange for new value defense, a party must satisfy a three-part test, showing

(1) that it extended new value to the debtor;

(2) that both parties intended the alleged new value and reciprocal transfer by the debtor to be contemporaneous; and

(3) the exchange was in fact contemporaneous. 5 Collier on Bankruptcy ¶ 547.04[1] (15th ed. as revised April 2010).
Summary judgment is appropriate if, assuming all reasonable inferences favorable to the nonmoving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The court will not grant summary judgment “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Doe v. U.S. Postal Serv., 317 F.3d 339, 342 (D.C. Cir. 2003). Although a finder of fact at trial is permitted to draw inferences from the evidence, those inferences “must be reasonably probable, and
based on more than speculation.” Rogers Corp. v. EPA, 275 F.3d 1096, 1103 (D.C. Cir. 2002) (internal quotations and citations omitted). When the evidence allows for contradictory inferences, summary judgment is inappropriate. Id. (citing Londrigan v. FBI, 670 F.2d 1164, 1171 n.37 (D.C. Cir. 1981)). The moving party bears the burden to show that the material facts are undisputed. See Celotex, 477 U.S. at 322. The nonmoving party, however, may not rest on mere allegations or denials, but must instead demonstrate the existence of specific facts that create a genuine issue for trial. See Liberty Lobby,477 U.S. at 256.



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