Third Circuit Rules Postpetition Payments Do Not Affect the New Value Defense Under § 547(C)(4)

The postpetition payment of prepetition claims commonly occurs in Chapter 11 cases involving operating businesses. In this article, published in the Norton Bankruptcy Law Adviser, Squire Sanders lawyers Stephen D. Lerner and Elliot M. Smith discuss the recent Third Circuit ruling in Friedman’s Liquidating Trust v. Roth Staffing Companies, LP (In re Friedman’s Inc.), 738 F.3d 547 (3d Cir. 2013), which addressed the relevance of postpetition payments to a subsequent new value defense to preference liability under section 547(c)(4) of the United States Bankruptcy Code.

This article is posted with permission of the publisher.