In this precedential decision by the United States Court of Appeals for the Third Circuit, the Court in Friedman’s Liquidating Trust v. Roth Staffing Companies LP (Case No. 13-1712) held that “where ‘an otherwise unavoidable transfer’ is made after the filing of a bankruptcy petition, it does not affect the new value defense.”
The opinion, filed December 24, 2013, examined closely two prior decisions of the Circuit: In re New York City Shoes, 880 F.2d 679 (3d Cir. 1989) and In re Winstar Communications, Inc., 554 F.3d 382 (3d Cir. 2009). The recent opinion found that the language of the new value test in New York City Shoes was mere dicta. The Court also recognized that in the Winstar case, the Court had called the New York City Shoes dicta a “holding.” However, the Court noted that articulation of the new value three-part test in New York City Shoes was wholly unnecessary to the decision either in that case or in Winstar. Accordingly, the Friedman’s Court found that it was not bound by either decision.