Lauter v. Wells Fargo Bank, No. 19-6013 (8th Cir. 2020)
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The Bankruptcy Appellate Panel affirmed the bankruptcy court's decision applying the contemporaneous exchange for new value preference defense under Bankruptcy Code 547(c)(1) to except payments by debtor to Wells Fargo from avoidance as preferences.
The panel held that new value was provided by the release of Wells Fargo's junior liens where a senior lienholder voluntarily released its liens for less than full payment of its debt; Wells Fargo provided new value to debtor when the IRS, a secured creditor senior to Wells Fargo, was paid from the proceeds of a sale of debtor's assets and voluntarily released its liens; a $100,000 payment made by debtor to Wells Fargo one day before a sale closing was intended to be a contemporaneous exchange; and Wells Fargo's release of claims against Phillips 66 and KCRC resulted in new value to debtor intended by the parties to be a contemporaneous exchange.
Court Description: [Schermer, Author, with Saldino, Chief Judge, and Shodeen, Bankruptcy Judge] Bankruptcy Appellate Panel. The bankruptcy court did not err in applying the contemporaneous exchange for new value preference defense under Code Sec. 547(c)(1) to except payments debtor made to Wells Fargo from avoidance as preferences.
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