11th Circ. Changes Course On New Value Defense

By Paul Avron (August 29, 2018, 2:54 PM EDT) -- In Kaye v. Blue Bell Creameries Inc. (In re BFW Liquidation LLC),[1] the Eleventh Circuit held that language in Charisma Investment Co. NV v. Airport System Inc. (In re Jet Florida System Inc.),[2] providing that the "new value" defense in Section 547(c)(4) could only be invoked as to new value that "remained unpaid," was dictum,[3] and on further review, was incorrect. Judge Julie Carnes, writing for the three-judge panel, made clear that "[t]his purported requirement was never at issue in the case and it played no role in our decision or reasoning."[4] The Eleventh Circuit's decision wipes out a valuable tool for debtors, trustees and post-confirmation estate representatives for avoiding and recovering preferential transfers,[5] and in doing so provides an additional tool for preference defendants. Judge Carnes explained that, because the relevant language in Jet Florida System was dictum, the court was free to re-examine the issue. After doing so, the court concluded that the requirement that new value remain unpaid was untenable on every level of analysis....

Law360 is on it, so you are, too.

A Law360 subscription puts you at the center of fast-moving legal issues, trends and developments so you can act with speed and confidence. Over 200 articles are published daily across more than 60 topics, industries, practice areas and jurisdictions.


A Law360 subscription includes features such as

  • Daily newsletters
  • Expert analysis
  • Mobile app
  • Advanced search
  • Judge information
  • Real-time alerts
  • 450K+ searchable archived articles

And more!

Experience Law360 today with a free 7-day trial.

Start Free Trial

Already a subscriber? Click here to login

Attached Documents

Related Sections

Law Firms

Companies

Judge Analytics

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!