Contemporaneous Exchange for New Value

Contemporaneous Exchange for New Value refers to a legal principle in bankruptcy law that protects certain transactions from being considered preferential. It occurs when a debtor pays a creditor for a service or goods received at the same time, which means the creditor provides new value rather than just benefiting from the debtor's prior debts. This type of exchange is seen as fair because the creditor is giving something of value immediately, rather than simply collecting on an old debt, thus preventing a preference over other creditors during the debtor's financial struggles.