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acquired by the debtor. The payment made in return for the goods cannot be rescinded to the extent that the se- curity interest secures new value that was provided by the signing of the se- curity agreement. A creditor can also assert a subse- quent new value defense. This defense provides that the trustee may not re- scind a payment if the creditor gave new value to the debtor such as a sub- sequent shipment of new goods after the payment was made. This defense only applies if these new goods are not protected by a security interest for the beneÞ t of the creditor. Essentially, this exception allows for the payment of previously supplied goods when you have entered into a subsequent transac- tion for which you have not been paid or protected with a security interest. DECISIONS, DECISIONS ?Now that you have an awareness of the system, and how it applies to your payment, the question remains, what should you do once you receive the notice from the bankruptcy trustee? Due to the uncertainties involved with bankruptcy litigation, we recommend that you hold on to the payment un- til forced to return it. Often, the Þ rst response is to do nothing. When an entity Þ les for Chapter 7 bankruptcy protection, the trustee sends out no- tices to all of the entities that received payments during the ninety day win-dow. These notices are usually sent out in the normal course of business and the trustee has usually not per- formed a cost beneÞ t analysis or ex- amined the payment closely. Thus, as the bankruptcy progresses, the trustee may Þ nd that reimbursement for your payment is not worth the time and at- tention that would be required to get it back. As such, ignoring the notice may be all that is needed to get the trustee to move on to other creditors. If the trustee continues to pursue the claim for reimbursement, it is a good time to ask the trustee to prove that the payment is actually a pref- erential payment covered under the Bankruptcy Code. Under the Code, the trustee has the burden of proving that the payment was preferential and should be returned. This request will www.marinelink.com MN 23MN Sept14 Layout 18-31.indd 23MN Sept14 Layout 18-31.indd 238/21/2014 12:06:26 PM8/21/2014 12:06:26 PM
