Creditors face many risks when a company files for bankruptcy. One such risk is preference exposure, which is where the company seeks to claw back funds paid to a creditor before the company files for bankruptcy. The Bankruptcy Code provides affirmative defenses that give a creditor an opportunity to reduce its preference exposure or liability.

This article addresses the new value defense (sometimes called the subsequent new value defense) in a bankruptcy case.

Troutman Pepper's Creditor’s Rights Toolkit is a series that provides practical insights to help creditors confront the challenges of commercial bankruptcy.