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Tex. 1995) (same).
Finding that a creditor advanced new value to the debtor subsequent to most of the claimed preferences it received, the U.S. Court of Appeals for the Fifth Circuit decided that the creditor was allowed to offset the value of its shipments against the preferences, reversing the judgments of the court below Williams v. Agama Systems Inc. (In re Micro Innovations Corp.), 185 F.3d 329 (5th Cir. 1999).
On appeal, computer parts wholesaler Agama Systems Inc. challenged the decision of the bankruptcy court, affirmed by the district court, allowing the trustee for debtor Micro Innovations Corp. ("MIC") to recover as avoidable preferences $313,292 of payments made by MIC to Agama during the 90-day period preceding MIC's bankruptcy filing. Agama made 54 separate deliveries of computer components to MIC during the preference period, valued at the time of sale at $279,905. In return, it received 49 MIC checks totaling $313,292.
Agama invoiced and "delivered a shipment and received a check for the value of each delivery. Each check was post-dated by at least seven days, however, and the check for a particular delivery always cleared after that delivery had been made. Other shipments followed the clearance of most of the checks, and Agama's invoices that accompanied shipments stated that it had a security interest on the merchandise. However, Agama did not perfect its security interest in the delivered goods.
After MIC filed a Chapter 7 petition, the trustee initiated an adversary proceeding against Agama to recover as preferences under Bankruptcy Code section 547(b) the payments made by MIC during the 90-day pre-filing period. The bankruptcy judge determined that the trustee could recover the full value of all payments made during the preference period. The district court affirmed.
In re Contempri Homes, Inc., 269 B.R. 124 (Bankr. M.D. Pa. 2001) contains an interesting discussion of the subsequent new value defense. In In re Primary Health Systems, Inc., 275 B.R. 709 (Bankr. D. Del.
