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whether such payments were otherwise avoidable under the plain terms of the statute) and Chrysler Credit Corp. v. Hall (In re JKJ Chevrolet, Inc.), 312 B.R. 797 (July 20, 2004 E.D. Va. 2004) vacated in part by, 412 F.3d 545 (4th Cir. 2005) (providing thorough discussion of the paid versus unpaid new value issue and concluding, based on the statutory language and the policy underlying the defense, that new value can be paid if the payment is itself not subject to avoidance, i.e., a preference; court notes that the estate is not depleted by transfers that are themselves subject to avoidance and that refusing to permit the creditor to receive the benefit of new value if the debtor subsequently pays in the preference period leaves the creditor in a worse position than those suppliers who refuse to do business with the financially-troubled debtor prior to the bankruptcy, a result completely counter to the purpose of Section (c)(4)). Accord Marshack v. Orange Comm, Credit (In re Nat'l Lumber & Supply, Inc.), 184 B.R. 74 (9th Cir. B.A.P. 1995); contra, In re Kroh Bros., 930 F.2d 648 (9th Cir. 1991). A return of good purchased negates the use of the shipment of those goods as subsequent new value. In re Login Bros. Book Co., Inc., 294 B.R. 297 (Bankr.
N.D. Ill. 2003).
8. Calculation.
Mosier v. Ever-Fresh Food Co. (In re IRFM, Inc.), 52 F.3d 228 (9th Cir. 1995). Subsequent advance of new value may be used to off-set prior (although not immediately prior) preferences. A creditor is permitted to carry forward preferences until they are exhausted by subsequent advances of new value. This method of calculating new value (i) encourages creditors to do business with financially troubled debtor, and (ii) recognizes the fluid nature of ongoing commercial activity where a creditor looks to a debtor's entire repayment history instead of one isolated transaction, to decide whether to advance new credit. See also Marshack v. Orange Comm. Credit (In re Nat'l Lumber & Supply, Inc.), 184 B.R. 74 (9th Cir.
B.A.P. 1995) (applying IRFM analysis); Clark v. Frank B. Hall & Co. (In re Sharoff Food Serv., Inc.), 179 B.R. 669 (Bankr. D. Colo. 1995) (same, but surplus new value cannot be used to offset later transfers); Krafsur v. Scurlock Permian Corp. (In re El Paso Refinery, L.P.), 178 B.R. 426 (Bankr. W.D.
