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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 ...