A bankruptcy trustee tried to recover a $936,741 wire transfer paid to subcontractor Homrich before the company filed for bankruptcy, claiming it was an unfair preference payment. The court ruled against the trustee because the payment was a contemporaneous exchange—the subcontractor released its lien rights in exchange for the payment, making it legitimate new value. This protects subcontractors who negotiate lien waivers in exchange for payment.
Lien waivers tied to payment create a legal shield against preference claims in bankruptcy. Document that the waiver and payment happened together.
A bankruptcy trustee cannot recover payments made in exchange for releasing lien rights, even if the company later files for bankruptcy.