USCA11 Case: 20-14647 Date Filed: 07/18/2022 Page: 1 of 29 [PUBLISH] In the United States Court of Appeals For the Eleventh Circuit ____________________ No. 20-14647 ____________________ AURIGA POLYMERS INC., Plaintiff-Appellant, versus PMCM2, LLC, as the Liquidating Trustee for the Beaulieu Liquidating Trust, Defendant-Appellee. ____________________ Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 4:17-bk-41677-BEM ____________________ USCA11 Case: 20-14647 Date Filed: 07/18/2022 Page: 2 of 29 2 Opinion of the Court 20-14647 Before WILSON and LAGOA, Circuit Judges, and MARTINEZ,* Dis- trict Judge. LAGOA, Circuit Judge: The Bankruptcy Code empowers a trustee to claw back “preferences,” i.e., certain transfers made by a debtor to a creditor on the eve on bankruptcy. 11 U.S.C. § 547(b). But the creditor who gives new value to the debtor after receiving a preference may use that new value to offset its preference liability. Id. § 547(c)(4). This “new value” defense, however, is itself offset to the extent that the debtor later makes an “otherwise unavoidable transfer” to the cred- itor on account of the value received. Id. § 547(c)(4)(b). This case presents an issue of first impression for this Court: whether post-petition transfers made under a 11 U.S.C. § 503(b)(9) request will reduce the creditor’s new value defense. See id. § 547(c)(4). We hold that, for purposes of § 547(c)(4)(B), “other- wise unavoidable transfers” made after the debtor has filed for bankruptcy do not affect a creditor’s new value defense. We thus affirm in part and reverse in part the bankruptcy court’s order on appeal. I. BACKGROUND Beaulieu Group, LLC (“Beaulieu”), was one of the largest carpet manufacturers in North America and “engaged in the *Honorable Jose E. Martinez, United States District Judge for the Southern District of Florida, sitting by designation. USCA11 Case: 20-14647 Date Filed: 07/18/2022 Page: 3 of 29 20-14647 Opinion of the Court 1 distribution of carpet and hard surface flooring products in both residential and commercial markets in the United States and many foreign countries.” Beaulieu was a pioneer in the carpet industry; it had developed vertically integrated manufacturing and distribu- tion operations, e.g., obtaining raw materials, manufacturing car- pets, and selling and distributing those carpets. Beaulieu had eight manufacturing facilities in Georgia and one in Alabama, and had three distribution facilities in Georgia, California, and Illinois. The largest manufacturing and distribution facilities—and the company headquarters—were located in Dalton, Georgia. Before filing for bankruptcy, the company had about 2,500 employees. The carpet industry is a $10 billion market annually in the United States, but consumer preference has shifted toward hard surface flooring products while increased competition in the carpet industry has pushed carpet prices down. Over the course of ten years, Beaulieu’s annual revenue declined from $1 billion in 2007 to less than $600 million in 2016, while its market share fell from 7.7 percent to 4.4 percent. In 2016, Beaulieu added new members to its board of direc- tors and brought in new senior management to develop a business turnaround and transformation …
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