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Credit transactions may be eligible for the Section 547(c)(1) contemporaneous exchange for new value defense to preference exposure: the Third Circuit Court of Appeals speaks.(credit column)(Universal Forest Products Inc.)(Hechinger Investment Company of Delaware, Inc.)

Business Credit

| July 01, 2007 | Nathan, Bruce | COPYRIGHT 2007 National Association of Credit Management. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

Just as I was pondering a summer of relaxation and a short sabbatical from writing, the United States Court of Appeals for the Third Circuit, in Hechinger Investment Company of Delaware, Inc. v. Universal Forest Products, Inc. (the "Hechinger case"), decided that credit transactions might be protected by the Section 547(c)(1) contemporaneous exchange for new value ("COD") defense to preference exposure. But what sort of credit terms could ever pass muster as a contemporaneous exchange for new value? Read on for the exciting answer--hopefully by the pool!

The Facts of the Hechinger Case

Hechinger filed Chapter 11 on June 11, 1999. Its 90-day preference ...

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