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If a preference is established by the trustee, the transferee-defendant has the burden of establishing the exceptions to avoidance in section 547(c). 11 U.S.C. S 547(g); see also Union Bank v. Wolas, 502 U.S. 151, 112 S. Ct. 527, 116 L. Ed. 2d 514 (1991).
Section 547(c)(1) excepts from avoidance a preferential transfer "to the extent that such transfer was - (A) 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 (B) in fact a substantially contemporaneous exchange . . . ." 11 U.S.C. S 547(c)(1). A creditor asserting a contemporaneous exchange exception must prove by a preponderance of the evidence that "(1) the transferee must have extended new value to the debtor in exchange for the payment or transfer; (2) the exchange of payment for new value must have been intended by the debtor and the transferee to be contemporaneous; and (3) the exchange must have been in fact substantially contemporaneous." Official Unsecured Creditors' Comm. v. Airport Aviation Servs., Inc. (In re Arrow Air, Inc.), 940 F.2d 1463, 1465 (11th Cir. 1991); Jones v. Ryder Integrated Logistics, Inc. (In re Jotan, Inc.), 264 B.R. 735, 750 (Bankr. M.D. Fla. 2001); Anderson-Smith & Assocs., Inc. v. Xyplex, Inc. (In re Anderson-Smith & Assocs., Inc.), 188 B.R. 679, 687 (Bankr. N.D. Ala. 1995). The purpose of the section 547(c)(1) defense is to protect transactions that do not diminish a debtor's estate. Alfa Mut. Fire Ins. Co. v. Memory (In re Martin), 184 B.R. 985 (M.D. Ala. 1995) aff'd, 101 F.3d 708 (11th Cir. 1996); Chancellor v. Jones Carpet & Rug Gallery, Inc. (In re Reliant Contractors, Inc.), 280 B.R. 705 (Bankr. S.D. Ala. 2001).
A party relying on the contemporaneous exchange defense, "must prove with specificity the measure of new value given the debtor in the exchange transaction he seeks to protect--and the challenged payment is protected only to the extent of the specific measure of new value shown. Arrow Air, 940 F.2d at 1466 (emphasis added). Each payment must match "a new and specific extension of credit." Id. Ordinarily, "an extension of credit, no matter how brief, does not constitute a contemporaneous exchange." Anderson-Smith, 188 B.R. at 688 (citing Wasserman v. Village Assocs. (In re Freestate Mgmt. Servs., Inc.), 153 B.R. 972, 984 (Bankr. D. Md. (1993)).
Additionally, courts have held that a creditor's performance of a pre-existing contractual obligation can never provide a debtor "new" value for purposes of section 547(c)(4). In re Globe Bldg.Materials, Inc., 484 F.3d 946 (7th Cir. 2007). In Globe, Debtor contracted with creditor to build an assembly line for manufacturing roofing tiles. During the preference period, Debtor made a regularly scheduled payment to Creditor, bringing its payment total to 90% of the purchase price. Subsequently, Creditor delivered the final components of the assembly line. The court held that because the delivery was made pursuant to a pre-existing contract, the value provided by the last delivery was not "new," and the creditor could not avail itself of the section 547(c)(4) subsequent new value
