Earlier this year, the U.S. Bankruptcy Court for the Middle District of Tennessee issued a decision holding that creditors sued for preferences can assert a new value defense based on the goods provided to a debtor in the 20 days before the bankruptcy case was filed. The debtor had challenged the effort to use those 20 day goods as new value because they are entitled to administrative claim priority under Section 503(b)(9) of the Bankruptcy Code. 

• For more information on this decision, read this informative CooleyAlert! prepared by the Bankruptcy & Restructuring group at Cooley Godward Kronish LLP, of which I am a member.
• You can also follow the link in this sentence for a copy of the Bankruptcy Court’s 11 page decision.

The law in this area continues to develop and trade vendors and suppliers of goods will find this update of particular interest.