Settlement Pacts & Forbearance Within 90-day Prepetition Period: New Value or no Value?
- Topics:
- Bankruptcies
- Tags:
- Bankruptcy,
- Business Operations,
- Debtor,
- Litigation,
- Transfer
- Source:
- Farrell Fritz, P.C.
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Overview: Read in the article that currently, there is no definite answer as to whether or not settlement agreements based on the forbearance of a suit will be deemed as a new obligation or a "transfer for or on account of an antecedent debt." It is important to draft the agreement, whether forbearance or settlement, to provide for consideration, financial or otherwise, in addition to mere forbearance. Bankruptcy Code Section 547(c)(1) provides that "the transferee may not avoid under this section a transfer to the extent that such transfer was intended by the debtor and the creditor to or for whose benefit such transfer was made to be a contemporaneous exchange for new value given to the debtor and in fact was a substantially contemporaneous exchange. The court reasoned that the basic concept underlying bankruptcy legislation is the fundamental goal of equality of distribution. More to go inside the article, continue to read.
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Format: HTML | Date: Jan 2001 | Pages: 1
