Section 547 of Chapter 11 of Title 11, (the Bankruptcy Code) empowers certain parties to claw back "preference payments" made by a debtor to a creditor within 90 days of a bankruptcy filing.
However, the new value that a creditor provides to the debtor after receiving a preference payment oftentimes may offset its preference liability on a dollar-for-dollar basis. While the concept may seem straightforward, the "new value" cannot be counted where the debtor later makes an "otherwise unavoidable transfer" to the creditor on account of, or, in other words, that satisfies, the new value received.
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