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Jennifer Hoover and Michael J. Barrie
more common of these defenses are discussed in this article. One such defense is the “subsequent new value defense.” T at defense allows a defendant to take a dollar-for-dollar credit against the alleged preferential transfers for certain new value extended after an alleged preferential payment was made. For example, if a creditor received a payment of $1,000 from the debtor within 90 days of a bankruptcy fi ling, and thereafter shipped $800 in goods to the debtor that remained unpaid as of the date of the bankruptcy fi ling, that creditor’s preference exposure will be reduced to $200. A creditor’s provision of new value is the most eff ec- tive defense to a preference action and the simplest to prove. A second affi rmative defense is the “ordinary course of
business defense.” Where a creditor has a history with the debtor, and the debtor has made the alleged preferential
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payments in accordance with its typical business practices with that creditor (or typical business practices of the industry), then those payments should be protected from a recovery by the debtor. T e ordinary course of business defense, however, may not be available where a creditor takes unusual steps to collect those funds (even if they are paid in traditional terms), such as where a creditor makes multiple or harassing calls to the debtor or pressures the debtor for payments. But, where a debtor pays within terms and in a relatively routine manner, those payments should be shielded from attack. T e contemporaneous exchange for new value is a third affi r-
mative defense. If you deliver goods to a debtor and then receive a payment nearly simultaneous with the delivery of those goods, it may be considered a contemporaneous exchange for new value which are immune from preference attack. T e above are only a few of the affi rmative defenses that are available to shield a creditor from preference exposure.
JULY/AUGUST 2013 DIVERSITY & THE BAR®
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