Kaye v. Blue Bell Creameries, Inc.

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After debtor filed for bankruptcy under Chapter 11, the trustee filed an adversary proceeding against Blue Bell to recover from Blue Bell more than $500,000 in a series of payments that Blue Bell had received from debtor during the 90-day period preceding debtor's bankruptcy filing. Blue Bell acknowledged that the payments it received from debtor constituted preferences under 11 U.S.C. 547(b), but that it had a new-value defense.The Eleventh Circuit vacated the bankruptcy court's judgment and held that the language in Charisma Investment Company, N.V. v. Airport Systems, Inc. (In re Jet Florida System, Inc.), 841 F.2d 1082 (11th Cir. 1988), relied on by the bankruptcy court was dictum and, as such, it did not bind the court. The court construed section 547(c)(4) anew, and held that it did not require new value to remain unpaid. Therefore, the court remanded for a new calculation of Blue Bell's preference liability. View "Kaye v. Blue Bell Creameries, Inc." on Justia Law