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value effectively returns each payment to the estate. Thus, the important inquiry is whether the new value replenishes the estate. See, e.g., Clark v. Frank B. Hall Co. (In re Sharoff Food Serv., Inc.), 179 B.R. 669 (Bankr. D. Colo. 1995); Kroh Bros. Dev. Co. v. Continental Const. Enig'rs., Inc. (In re Kroh Bros. Dev. Co.), 930 F.2d 648 (8th Cir. 1991).
The purpose of the new value defense is to encourage trade creditors to continue dealing with troubled businesses and to treat fairly a creditor that has replenished estate after having received preference. In re Boston Pub. Co. Inc., 209 B.R. 157 (Bankr. D. Mass. 1997). When debtor makes preferential payment and creditor later supplies value to the debtor for which there are no further payments made, creditor is entitled to reduce amount of any recoverable preference by amount of new value that it gave, in effect "netting out" the two transactions. In re Chez Foley, Inc., 211 B.R. 25 (Bankr. Minn. 1997).
A Ponzi scheme investor was not entitled to invoke new value exception to on basis of his "reinvesting" certain commissions with Chapter 7 debtor operators rather than receiving actual dollars from debtors in payment of such commissions. In re Ramirez Rodriguez, 209 B.R. 424 (Bankr. S.D. Tex. 1997).
3. Definition of New Value.
Schlant v. Schueler (In re Buffalo Auto Glass), 187 B.R. 451 (Bankr. W.D.N.Y. 1995). The court rejected a per se rule that forbearance can never be new value, and instead stated that if forbearance is the new value asserted, the creditor must prove the actual value to the debtor in money or money's worth. In so doing, the court noted that often times evidence of such value will be too speculative to be meaningful: The court denied a portion of the trustee's motion for summary judgment and instructed that there be a trial on the discrete issue of whether the defendant's forbearance of a paycheck while she continued to work for the debtor augmented the estate so as to constitute new value.
Clark v. Frank B. Hall Co. (In re Sharoff Food Serv., Inc.), 179 B.R. 669 (Bankr. D. Colo. 1995).
