Contact: John Hartgen
703-739-0800
DELIVERY OF
GOODS WITHIN 90 DAYS OF A COMPANY FILING FOR BANKRUPTCY PROVIDES
“NEW VALUE” FOR PAYMENTS RECEIVED BY SUPPLIER, ACCORDING TO
LATEST
POLL
October 29, 2007,
Alexandria, Va. —A majority of respondents (68 percent)
to
poll agreed that a payment to a supplier for contractually obligated
delivery of goods within 90 days of a debtor company filing for
bankruptcy does not constitute a preference payment. Forty-eight percent
of respondents “strongly agreed” and 20 percent
“somewhat agreed” that a payment to a supplier for
contractually obligated delivery of goods within 90 days of a debtor
company filing for bankruptcy provides “new value” that
would allow the supplier to keep the payment.
Twenty-five percent of
respondents, however, did not agree that a payment to a supplier for
contractually obligated delivery of goods within 90 days of a debtor
company filing for bankruptcy provided “new value” that
would allow the supplier to keep the payment. Twelve percent
“strongly disagreed” and 13 percent “somewhat
disagreed” that a supplier’s delivery of goods it was
contractually obligated to furnish provides “new value” that
would allow the supplier to keep a payment the debtor made within 90
days of filing for bankruptcy. Six percent of the respondents did not
know or had no opinion on the issue.
Under the Bankruptcy Code, a
debtor or trustee may generally seek to recover payments of debt made by
the debtor to a supplier within 90 days before the debtor files for
bankruptcy, known as a preference payment. However, the Code also
provides a “new value” exception so that a creditor may
continue to extend credit and that the creditor will receive the value
of any prior payment that would otherwise be considered a preference.
The poll question was based on a case in which the Seventh Circuit Court
of Appeals in In re Globe Building Materials Inc. rejected a
“new value” claim of a supplier because it was contractually
obligated to deliver goods before it had received the
payment.
size='3'>ABI
were welcome to submit their response to the statement: “A
supplier's delivery of component parts it was contractually obligated to
furnish, within 90 days of a debtor's bankruptcy filing, provides
‘new value’ that would allow the supplier to keep a payment
the debtor made to it during that period for such parts. (Gouveia v.
RDI Group (In re Globe Building Materials, Inc.), 7th Cir.
No. 05-4749 (5/4/07))”
size='3'>ABI
title='blocked::http://www.abiworld.org/'
href='http://www.abiworld.org/'>www.abiworld.org.
w:st='on'>ABI
respond to a question on a timely bankruptcy or insolvency issue. Visit
href='http://www.abiworld.net/quickpoll/'>
color='#0000ff'>http://www.abiworld.net/quickpoll/ to access
the results of previous
Quick Polls.
###
size='3'>ABI
nonpartisan organization dedicated to research and education on matters
related to insolvency.
was founded in 1982 to provide Congress and the public with unbiased
analysis of bankruptcy issues. The
w:st='on'>ABI
attorneys, accountants, bankers, judges, professors, lenders, turnaround
specialists and other bankruptcy professionals, providing a forum for
the exchange of ideas and information. For additional information on
For additional conference information, visit
title='blocked::http://www.abiworld.org/conferences.html'
href='http://www.abiworld.org/conferences.html'>
color='#0000ff'>http://www.abiworld.org/conferences.html.