                       PUBLISHED


UNITED STATES COURT OF APPEALS
             FOR THE FOURTH CIRCUIT


In Re: ESA ENVIRONMENTAL               
SPECIALISTS, INC.,
                        Debtor.


STANLEY MARVIN CAMPBELL,                   No. 11-2150
                Plaintiff-Appellant,
                v.
THE HANOVER   INSURANCE COMPANY,
               Defendant-Appellee.
                                       
        Appeal from the United States District Court
  for the Western District of North Carolina, at Charlotte.
          Graham C. Mullen, Senior District Judge.
   (3:10-cv-00578-GCM; 3:09-ap-03143; 3:07-bk-31532)

                 Argued: October 25, 2012

                  Decided: March 1, 2013

  Before TRAXLER, Chief Judge, and WILKINSON and
               AGEE, Circuit Judges.



Affirmed by published opinion. Judge Agee wrote the major-
ity opinion, in which Judge Wilkinson joined. Chief Judge
Traxler wrote a dissenting opinion.
2            In Re: ESA ENVIRONMENTAL SPECIALISTS
                             COUNSEL

Allen Burton Shuford, THE BAIN GROUP, PLLC, Charlotte,
North Carolina, for Appellant. William L. Esser, PARKER,
POE, ADAMS & BERNSTEIN, LLP, Charlotte, North Caro-
lina, for Appellee.


                             OPINION

AGEE, Circuit Judge:

   The Trustee in bankruptcy of ESA Environmental Special-
ists, Inc. ("ESA") appeals from the affirmance by the district
court of the award of summary judgment by the bankruptcy
court to The Hanover Insurance Co. ("Hanover"). The bank-
ruptcy court concluded that ESA’s transfer of $1.375 million
to Hanover within 90 days of ESA’s filing a petition for bank-
ruptcy was not an avoidable preference under 11 U.S.C.
§ 547(b). For the reasons set forth below, we affirm the award
of summary judgment to Hanover.

                                   I

              Background and Proceedings Below

   ESA was an environmental and industrial engineering firm
that sought and performed construction projects under con-
tract with the federal government. Pursuant to the Miller Act,
ESA was required to obtain and furnish to the government
two types of surety bonds1 as a condition precedent "[b]efore
any contract of more than $100,000 [could be] awarded for
    1
   The surety bonds included performance bonds to protect the govern-
ment if the contractor failed to complete a contract, 40 U.S.C.
§ 3131(b)(1), and payment bonds to protect "all persons supplying labor
and material in carrying out the work provided for in the contract," id.
§ 3131(b)(2).
            In Re: ESA ENVIRONMENTAL SPECIALISTS               3
the construction, alteration, or repair of any public building or
public work of the Federal Government." 40 U.S.C.
§ 3131(b). These surety bonds functioned to secure ESA’s
obligation to complete its contract and pay its vendors and
subcontractors. See id.

   In 2006, Hanover issued surety bonds on behalf of ESA
prior to the federal government’s award of eight contracts to
ESA (the "Existing Projects"). In April 2007, ESA borrowed
$12.2 million from Prospect Capital Corp. ("Prospect") to,
among other things, meet current working capital needs, repay
existing indebtedness, and "fund costs associated with enter-
ing into and fulfilling government contracts." (J.A. 655.) In
May 2007, ESA asked Hanover to issue additional surety
bonds (the "New Bonds") in conjunction with seven addi-
tional government contracts that ESA sought to obtain (the
"New Contracts" and collectively with the Existing Projects,
the "Government Contracts"). ESA could not commence work
on the New Contracts until it tendered the New Bonds to the
appropriate government agencies, as the New Bonds were a
condition precedent to the final contract award to ESA. Hano-
ver, concerned about ESA’s financial stability, would not
issue the New Bonds without additional security over and
above the bond premiums. The parties agreed upon a letter of
credit as the additional security by which Hanover would
agree to issue the New Bonds. ESA was required to obtain an
irrevocable letter of credit from SunTrust Bank ("SunTrust")
in the amount of $1.375 million with Hanover as the benefi-
ciary (the "Letter of Credit"). The Letter of Credit would col-
lateralize the New Bonds but also all of Hanover’s existing
guarantees and surety obligations on behalf of ESA. The bond
premiums on the New Bonds totaled $74,624, and the face
value of the New Bonds totaled $7.9 million.

   As a condition precedent to issuance of the Letter of Credit,
SunTrust required ESA to fund a certificate of deposit at Sun-
Trust in the amount of $1.375 million (the "CD") as security
for the Letter of Credit. ESA had limited cash reserves, so it
4            In Re: ESA ENVIRONMENTAL SPECIALISTS
turned to Prospect for the additional capital necessary to fund
the CD. Prospect and ESA then amended their existing credit
agreement to increase the principal amount of Prospect’s
existing loan to ESA by a total of $1.575 million (the "Pros-
pect Loan").2 On May 8 and May 17, 2007, in two separate
transfers, Prospect tendered the Prospect Loan funds directly
to ESA, and ESA deposited those funds into its bank account.
On May 17, 2007, ESA transferred $1.375 million of the
Prospect Loan proceeds to SunTrust to fund the CD to secure
the Letter of Credit for Hanover.3 SunTrust then issued the
Letter of Credit, and Hanover in turn issued the New Bonds,
which ESA delivered to the appropriate federal government
agencies for final award of the New Contracts.

   Despite being awarded the New Contracts, ESA’s financial
condition continued to deteriorate and it filed a voluntary
Chapter 11 petition in the United States Bankruptcy Court for
the Western District of North Carolina on August 1, 2007.
Hanover then drew on the Letter of Credit, receiving the
$1.375 million face amount from SunTrust, which liquidated
the CD.

   In the course of ESA’s bankruptcy proceeding, the bank-
ruptcy court approved the sale of substantially all of ESA’s
assets to Prospect. As part of that sale, ESA assigned to Inte-
grated Contract Services ("ICS"), an affiliate of Prospect, (i)
its rights under the Government Contracts, (ii) all of its litiga-
tion claims or causes of action, including its preference and
avoidance claims (the "Litigation Rights"), and (iii) its right
to the return of any collateral remaining upon the completion
    2
    Prospect and ESA first amended their existing credit agreement on
May 7, 2007, to increase the principal amount of Prospect’s loan to ESA
by $625,000, from $12.2 million to $12.825 million. On May 17, 2007,
Prospect and ESA executed a second amendment to their existing credit
agreement, increasing the principal amount of the loan by an additional
$950,000, from $12.825 million to $13.775 million.
  3
    Apparently, ESA used the remaining $200,000 of the Prospect Loan
funds in its operations, and that amount is not at issue in this appeal.
              In Re: ESA ENVIRONMENTAL SPECIALISTS                      5
of the Government Contracts. Shortly thereafter, ICS ceased
operations and assigned ESA’s assets, including the Litigation
Rights, back to Prospect. Neither ICS nor Prospect com-
menced work on the Government Contracts, but Hanover
remained bound by the surety bonds to provide for successful
completion of those contracts.

   In February 2008, the bankruptcy court entered an order
allowing Hanover to take responsibility for the completion of
the Government Contracts. Hanover represents, without con-
tradiction, that "[s]ince entry of that order, Hanover fulfilled
its obligations . . . , including ensuring that the [G]overnment
[C]ontracts were completed and subcontractors paid." (Appel-
lee’s Br. 7.)

   Also in February 2008, on Prospect’s motion, the bank-
ruptcy court entered an order converting ESA’s case from
Chapter 11 to a Chapter 7 proceeding and directing the
appointment of a Chapter 7 trustee. Stanley Campbell was
duly appointed as the Chapter 7 trustee for ESA (the
"Trustee") and took control of ESA’s bankruptcy estate. In
July 2009, the bankruptcy court entered an order approving a
stipulation agreement between Prospect and the Trustee,
under which Prospect assigned the Litigation Rights to the
Trustee, and the Trustee agreed to split the proceeds from any
successful actions with Prospect.4

   Subsequently, the Trustee filed an adversarial proceeding
against Hanover, alleging that Hanover was an indirect bene-
ficiary of ESA’s transfer of the Prospect Loan proceeds into
the CD and that this transfer was an avoidable, preferential
transfer under 11 U.S.C. § 547. Hanover asserted two affirma-
tive defenses to the Trustee’s claims in the bankruptcy court:
  4
   Under the stipulation agreement, Prospect would receive 75 percent of
the balance of any proceeds after costs and fees. ESA’s bankruptcy estate
would retain the remaining 25 percent for distribution to ESA’s creditors,
including Prospect.
6            In Re: ESA ENVIRONMENTAL SPECIALISTS
(1) that the transfer was not a preference because the Prospect
Loan proceeds were earmarked specifically for payment to
Hanover, and (2) that ESA received new value in exchange
for the Prospect Loan proceeds. Hanover contended either of
these affirmative defenses barred the Trustee’s claims as a
matter of law and moved for summary judgment.

   The bankruptcy court granted summary judgment in favor
of Hanover, holding both the earmarking and new value
defenses applied to prevent a determination that ESA’s trans-
fer of funds was a preferential transfer and avoidable by the
Trustee. Further, the bankruptcy court also opined that "[i]t
would be inequitable to require Hanover to return the portion
of the Prospect [Loan] used to cover the costs to complete the
[Government Contracts] when Hanover did the work, and
paid the obligations." (J.A. 924.) The Trustee appealed the
bankruptcy court’s judgment to the United States District
Court for the Western District of North Carolina, which
affirmed. From the district court’s affirmation of the bank-
ruptcy court’s grant of summary judgment, the Trustee now
timely appeals. We have jurisdiction under 28 U.S.C. §§ 158,
1291.

                              II

                     Standard of Review

   When considering an appeal from a district court acting in
its capacity as a bankruptcy appellate court, we conduct an
independent review of the bankruptcy court’s decision,
reviewing factual findings for clear error and legal conclu-
sions de novo. See Banks v. Sallie Mae Serv. Corp. (In re
Banks), 299 F.3d 296, 300 (4th Cir. 2002). A bankruptcy
court properly grants summary judgment when no genuine
issues of material fact exist and "the movant is entitled to
judgment as a matter of law." Fed. R. Civ. P. 56(a).

    A trustee in bankruptcy
            In Re: ESA ENVIRONMENTAL SPECIALISTS              7
    may avoid any transfer of an interest of the debtor in
    property—

         (1) to or for the benefit of a creditor;

         (2) for or on account of an antecedent debt
         owed by the debtor before such transfer
         was made;

         (3) made while the debtor was insolvent;

         (4) made . . . on or within 90 days before
         the date of the filing of the petition; . . .

         (5) that enables such creditor to receive
         more than such creditor would receive if
         . . . the transfer had not been made.

11 U.S.C. § 547(b). The trustee bears the burden of proving
the avoidability of a transfer under § 547(b). Id. § 547(g).

                              III

                           Analysis

   Hanover does not contest that the Trustee has presented a
prima facie case under § 547(b) for the avoidance of the trans-
fer to it of the $1.375 million. Instead, Hanover contends that
it has established three affirmative defenses to avoidance: ear-
marking, new value, and equity. First, the Trustee argues that
the bankruptcy court improperly applied the earmarking
defense because ESA did not use the Prospect Loan proceeds
to pay an antecedent debt. Second, the Trustee argues that the
bankruptcy court improperly applied the new value defense
because Hanover did not prove with specificity the amount of
the new value it provided ESA and the bankruptcy court
clearly erred in its findings of fact. Third, the Trustee argues
that the bankruptcy court improperly held in favor of Hanover
8             In Re: ESA ENVIRONMENTAL SPECIALISTS
on independent equitable grounds, which are not recognized
as a defense to an avoidance action in bankruptcy. We address
each argument in turn.

                                    A

                              Earmarking

   The earmarking defense in bankruptcy is a judicially cre-
ated exception to the statutory power of the bankruptcy
trustee under § 547 to avoid or set aside an otherwise prefer-
ential transfer of assets.5 See McCuskey v. Nat’l Bank of
Waterloo (In re Bohlen Enters., Ltd.), 859 F.2d 561, 565 (8th
Cir. 1988). The earmarking defense applies "[w]hen a third
person makes a loan to a debtor specifically to enable that
debtor to satisfy the claim of a designated creditor." 5 Collier
on Bankruptcy ¶ 547.03[2][a] (16th ed. 2011); see Va. Nat’l
Bank v. Woodson (In re Decker), 329 F.2d 836, 839 (4th Cir.
1964) (holding that a transfer was not an avoidable preference
when it "was made for the specific purpose of paying at least
a portion of a particular debt"). The proceeds of such an "ear-
marked" loan "never become part of the debtor’s assets and
therefore no preference is created" because the transfer does
not diminish the value of the debtor’s estate.6 5 Collier on
    5
     As a judicially created exception to a statutory rule, the earmarking
defense must be narrowly construed. See Sheppard v. Riverview Nursing
Ctr., Inc., 88 F.3d 1332, 1344 n.5 (4th Cir. 1996) (noting that the "special
circumstances" exception under 42 U.S.C. § 2000e-5(g)(2)(B) "is judi-
cially created and should be narrowly construed" (citing Hatfield v. Hayes,
877 F.2d 717, 720 (8th Cir. 1989))); see also Storm v. Storm, 328 F.3d
941, 944 (7th Cir. 2003) ("[T]he probate exception, as a judicially created
exception to the statutory grant of diversity jurisdiction, should be con-
strued narrowly."); Love v. Deal, 5 F.3d 1406, 1410 (11th Cir. 1993)
("Because the special circumstances exception is a judicially created con-
cept, we have held that it should be construed narrowly so as not to inter-
fere with the congressional purposes behind the fee award statutes.").
   6
     While § 547(a) clearly establishes that the trustee in bankruptcy bears
the ultimate burden of proof of the avoidability of a transfer under
              In Re: ESA ENVIRONMENTAL SPECIALISTS                       9
Bankruptcy ¶ 547.03[2][a]; see Decker, 329 F.2d at 839 ("As
a general rule, such a payment, in and of itself and without
more, will not create a voidable preference since there has
been no diminution of the value of the estate.").

   This Circuit has previously recognized the earmarking
defense in Decker, but only in the limited circumstance of a
direct payment from one creditor to another. 329 F.2d at 839.
In Decker, the debtor had overdrawn his bank accounts by
about $8,000. Id. at 838. Shortly before filing for bankruptcy,
the debtor’s sister paid the bank the existing $8,000 debt to
cover the overdrafts and became a creditor of the debtor in
approximately the same amount as he had owed the bank. Id.
at 839. The debtor’s trustee in bankruptcy attempted to avoid
the $8,000 transfer from the debtor’s sister to the bank as
preferential, arguing that the payment was in essence a loan
to the debtor and that the debtor’s estate diminished when the
$8,000 was paid to the bank. Id.

   In considering this argument, we first noted the basic prin-
ciple of bankruptcy that, "[i]f an unconditional loan is made
to a bankrupt, the loan proceeds become part of the bank-

§ 547(b), the burden as to the earmarking defense is not as clear. A major-
ity of the Circuits hold that, once the trustee meets his burden of proving
the avoidability of a transfer under § 547(b), the burden "shifts to the
defendant in the preference action to show that the funds were ear-
marked." Schubert v. Lucent Tech. Inc. (In re Winstar Commc’ns, Inc.),
554 F.3d 382, 401 (3d Cir. 2009) (quoting Metcalf v. Golden (In re Adbox,
Inc.), 488 F.3d 836, 842 (9th Cir. 2007)) (quotation marks omitted); see
Chase Manhattan Mortg. Corp. v. Shapiro (In re Lee), 530 F.3d 458, 470
(6th Cir. 2008) (placing the burden of proving the earmarking defense on
the defendant). The Eighth Circuit holds, however, that "the trustee [has]
the burden to prove the earmarking defense does not apply." Kaler v.
Cmty. First Nat’l Bank (In re Heitkamp), 137 F.3d 1087, 1089 (8th Cir.
1998). We need not resolve this conflict in order to answer the earmarking
issue in this case because the undisputed facts establish that the earmark-
ing defense does not apply as a matter of law, as we more fully discuss
below.
10            In Re: ESA ENVIRONMENTAL SPECIALISTS
rupt’s free assets." Id. We then concluded that "in the case at
bar, it is clear . . . that the payment of the $8,000.00 by Miss
Decker was not an unconditional loan for the benefit of all
creditors but was made for the specific purpose of paying at
least a portion of a particular debt owed to the bank." Id. at
839. We concluded that "[a]s a general rule, such a payment,
in and of itself and without more, will not create a voidable
preference since there has been no diminution of the value of
the estate." Id. We then stated that "[t]he test is not what the
creditor receives but what the bankrupt’s estate has lost. It is
the diminution of the bankrupt’s estate, not the unequal pay-
ment to creditors, which is the evil sought to be remedied by
the avoidance of a preferential transfer."7 Id. at 840.

   Since our opinion in Decker, courts have uniformly held
that the earmarking defense applies "whether the proceeds of
the loan are transferred directly by the lender to the creditor
or are paid to the debtor with the understanding that they will
be paid to the creditor in satisfaction of his claim, so long as
the proceeds are clearly ‘earmarked.’" 5 Collier on Bank-
ruptcy ¶ 547.03[2][a]. Courts continue to recognize, though,
that "[a] payment by a debtor with borrowed money . . . may
constitute a preference when the loan so used was not made
upon the condition that it should be applied to the particular
creditor to whom it was paid over." 5 Collier on Bankruptcy
¶ 547.03[2][a] (citing Brown v. First Nat’l Bank of Little
Rock, 748 F.2d 490, 492 n.6 (8th Cir. 1984); Smyth v. Kauf-
   7
     It may be useful to give a generic example of a transfer that should
qualify as an earmark that is not an avoidable preference in bankruptcy.
If X chose to pay debtor A’s debt to creditor Y, there is a preference
received by creditor Y when compared to all debtor A’s other creditors:
that is, Y got paid before any of A’s similarly situated creditors were paid.
But, for bankruptcy purposes, the debtor’s bankruptcy estate is unchanged:
its assets are no greater and no less than before the transfer from X to Y.
In liquidation of A’s bankruptcy estate, A’s creditors would receive no
less than they would have received had the X to Y transaction never taken
place. In effect, the transfer of assets from X to Y resembles a novation
as X simply takes the place of creditor Y with respect to debtor A.
            In Re: ESA ENVIRONMENTAL SPECIALISTS             11
man (In re J.B. Koplik & Co.), 114 F.2d 40, 42 (2d Cir.
1940)).

   The bankruptcy court here correctly recognized that the
Fourth Circuit adopted the concept of the earmarking defense
as an affirmative defense in bankruptcy in Decker. However,
the bankruptcy court erred in its determination that the ear-
marking defense applies in this case. The transfer from Pros-
pect to ESA to SunTrust and later to Hanover lacks a critical
element of an earmarking defense: the funds at issue were not
used to pay an antecedent debt.

   The $1.375 million at issue in this case was not transferred
directly from creditor to creditor, i.e., from Prospect to Hano-
ver. Instead, ESA received the funds from Prospect, placed
the funds in its own bank account, and only later deposited the
funds with SunTrust to secure Hanover. The parties argue at
length over whether ESA had control over the Prospect Loan
proceeds so that those funds could not be deemed earmarked
under our precedent in Decker. Resolution of that factual dis-
pute, however, is irrelevant to the determination of whether
Hanover’s earmarking defense applies because Hanover failed
to prove a fundamental element of earmarking—that the
transferred funds paid an antecedent debt of the debtor, ESA.

   The earmarking doctrine applies only when the debtor bor-
rows money from one creditor and the terms of that agree-
ment require the debtor to use the loan proceeds to extinguish
specific, designated, existing debt. See 5 Collier on Bank-
ruptcy ¶ 547.03[2][a] (citing Brown, 748 F.2d at 492 n.6;
Smyth, 114 F.2d at 42). "Accordingly, the proper inquiry is
. . . whether the debtor had the right to disburse the funds to
whomever it wished, or whether [the] disbursement was lim-
ited to a particular old creditor or creditors under the agree-
ment with the new creditor." Adams v. Anderson, (In re
Superior Stamp & Coin Co.), 223 F.3d 1004, 1009 (9th Cir.
2000). Without the satisfaction of an antecedent debt of the
debtor by the new creditor, the concept of earmarking cannot
12            In Re: ESA ENVIRONMENTAL SPECIALISTS
apply: there is no debt by which one creditor is substituted for
another. See Decker, 329 F.2d at 838 ("It is clear that it was
the intention of Vivian Decker[, as a new creditor,] that the
$8,000.00 paid by her to the bank was to be applied toward
satisfaction of an antecedent debt of Decker[, the debtor in
bankruptcy,] to the bank."). In the case at bar, a new debt was
created where none previously existed.

   Even were we to assume, arguendo, that Prospect loaned
ESA the funds at issue for the specific purpose of securing
Hanover, ESA did not use the loan proceeds to pay an exist-
ing debt. Here, ESA borrowed money from Pros-
pect—incurring new debt—and used those funds to
collateralize both existing obligations to Hanover as well as
the New Bonds—a new debt not previously owed to any cred-
itor. ESA did not use the Prospect Loan funds to pay anteced-
ent or old debt, nor did ESA merely substitute one creditor for
another so that the pot available to pay existing creditors was
unaffected by the transfer. To the contrary, ESA now owes a
much higher total debt than it did before the Prospect Loan,
thereby diminishing the share available from ESA’s bank-
ruptcy estate for repayment of ESA’s existing creditors.

   Hanover does not contest that ESA used the Prospect Loan
proceeds to secure its obligations to Hanover rather than to
pay an antecedent debt. Nor does Hanover assert that ESA in
fact substituted one creditor for another. Consequently, the
earmarking defense cannot apply in this case. The bankruptcy
court therefore erred in holding that an earmarking defense
applied to prevent the Trustee from avoiding the transfer to
Hanover under § 547.8
  8
    Moreover, the bankruptcy court made a legally inconsistent determina-
tion that Hanover established both a complete earmarking defense and a
complete new value defense. As an element of the earmarking defense, the
defendant in an avoidance action must prove that the alleged preferentially
transferred funds were used to pay an antecedent debt. As discussed in
more detail below, the new value defense applies in the opposite situa-
              In Re: ESA ENVIRONMENTAL SPECIALISTS                      13
                                    B

                              New Value

   In contrast to the judicially created earmarking defense, the
"new value" defense is an explicit statutory defense to a
§ 547(b) preference action:

     The trustee may not avoid under this section a trans-
     fer—

           (1) to the extent that such transfer was—

              (A) intended by the debtor and the credi-
              tor to or for whose benefit such transfer
              was made to be a contemporaneous
              exchange for new value given to the
              debtor; and

              (B) in fact a substantially contemporane-
              ous exchange.

11 U.S.C. § 547(c)(1). The statute defines "new value" as

     money or money’s worth in goods, services, or new
     credit, or release by a transferee of property previ-
     ously transferred to such transferee in a transaction
     that is neither void nor voidable by the debtor or the

tion—when the allegedly preferentially transferred funds were used not to
pay antecedent debt, but, instead, to support a new transaction. See United
Rentals Inc. v. Angell, 592 F.3d 525 (4th Cir. 2010) ("[The new value
defense] was designed to prevent trustees from avoiding payments that
were clearly intended to support a new transaction, instead of an anteced-
ent debt." (quoting Batlan v. TransAmerica Comm. Fin. Corp. (In re
Smith’s Home Furnishings, Inc.), 265 F.3d 959, 965 n.4 (9th Cir. 2001))
(internal quotation marks omitted)). Thus, at least in most circumstances,
the earmarking and new value defenses are mutually exclusive.
14          In Re: ESA ENVIRONMENTAL SPECIALISTS
     trustee under any applicable law, including proceeds
     of such property, but does not include an obligation
     substituted for an existing obligation.

11 U.S.C. § 547(a)(2). Congress intended § 547(c)(1) "to
encourage creditors to continue to deal with troubled debtors"
by "prevent[ing] trustees from avoiding payments that were
clearly intended to support a new transaction, instead of an
antecedent debt." United Rentals, 592 F.3d at 529 (quoting 5
Collier on Bankruptcy ¶ 547.04[1]; Batlan, 265 F.3d at 965
n.4) (internal quotation marks omitted). A payment may sup-
port a new value defense even if the debtor receives it "from
a party other than the creditor." 5 Collier on Bankruptcy
¶ 547.04[1][c]. When evaluating a new value defense, the key
question is whether the alleged preferential transfer dimin-
ished the debtor’s estate, i.e., whether the debtor in fact
acquired a new asset that offset the loss in value to the estate
when the debtor transferred existing assets to acquire the new
asset at issue. See id.

   The party asserting the new value defense (Hanover, in this
case) bears the burden of proof. See United Rentals, 592 F.3d
at 531. As part of that burden, the party asserting the new
value defense must prove that (1) "the parties intend[ed] the
transaction to be substantially contemporaneous" and (2) "the
exchange of new value between the debtor and the defendant
[was] in fact . . . substantially contemporaneous." 5 Collier on
Bankruptcy ¶ 547.04[1][a] & [b]. The party bearing the bur-
den of proof also "must prove with specificity the new value
given to the debtor." Jet Fla., Inc. v. Am. Airlines, Inc. (In re
Jet Fla. Sys., Inc.), 861 F.2d 1555, 1559 (11th Cir. 1988); see
Lowrey v. U.P.G., Inc. (In re Robinson Bros. Drilling, Inc.),
877 F.2d 32, 34 (10th Cir. 1989); see also 5 Collier on Bank-
ruptcy ¶ 547.04 n.6.

  As to the new value defense element of intent to make a
contemporaneous exchange, § 547(c)(1)(A), the Trustee does
not dispute that ESA and Hanover intended the $1.375 million
               In Re: ESA ENVIRONMENTAL SPECIALISTS                         15
transfer to be a contemporaneous exchange for new value in
the form of the New Contracts.9,10 The Trustee does argue,
however, that the bankruptcy court erred in its new value
determination for all other § 547(c)(1) purposes in two ways.
First, the Trustee contends that Hanover failed to carry its
burden of proof in the bankruptcy court to establish with spec-
ificity the exact measure of the new value received by ESA
and that the bankruptcy court clearly erred in its finding that
the New Contracts had a value in excess of $1.375 million.
Second, the Trustee argues that the bankruptcy court clearly
erred in its conclusion that ESA in fact received the New
Contracts in contemporaneous exchange for its transfer to
Hanover, notwithstanding the intent of the parties.

   Because these arguments focus on the bankruptcy court’s
findings of fact regarding the value of the New Contracts, we
reiterate that we apply clear error review. Banks, 299 F.3d at
300. This means that we will not reverse the trial court’s find-
ing of fact that has support in the evidence unless that finding
  9
    In representations to this Court at oral argument, Hanover proffered
that it would use only part of the $1.375 million it received from drawing
on the Letter of Credit in fulfilling the New Contract obligations. Hanover
stated that it would be in a position to return the remaining collateral, esti-
mated to be between $500,000 and $600,000, to ESA’s bankruptcy estate
upon final completion of the remaining New Contracts. We consider Han-
over’s proffer to the Court to be its affirmative obligation to fulfill by ten-
dering the remaining collateral funds to the Trustee on behalf of the
bankruptcy estate.
   10
      The Chief Judge, in dissent, argues that Hanover failed to meet its bur-
den of proving that the New Contracts had a commercial value of at least
$1.375 million. Yet the Trustee admitted that the New Contracts were, in
and of themselves, an asset with an ascertainable value. That is not sur-
prising, as the transfer of contracts—whether as an asset for sale or as
secured collateral—is a commonplace factor of commercial life. That the
New Contracts were indeed a fungible commercial asset—and clearly
"new value" for § 547(c) purposes—is well represented by the facts of this
case. Not only were the New Contacts an item given as collateral, but
were indeed bought and conveyed among ESA, ICS, Prospect and, ulti-
mately, Hanover.
16            In Re: ESA ENVIRONMENTAL SPECIALISTS
is clearly wrong. Chesapeake Lighterage & Towing Co. v.
Balt. Copper Smelting & Rolling Co., 40 F.2d 394, 395 (4th
Cir. 1930). Applying this standard of review, the Trustee’s
arguments fail.

   The Trustee does not contest that the New Contracts have
value—he states in his reply brief that the measure of value
of these contracts "is the expectation of the parties at the time
of the transfer." (Reply Br. 17 (citing Creditors’ Comm. v.
Spada (In re Spada), 903 F.2d 971, 975 (3d Cir. 1990)).)
Instead, what the Trustee argues is that Hanover failed to
meet its burden of proving the value of the New Contracts
with the requisite specificity. The thrust of the Trustee’s posi-
tion is that Hanover presented evidence demonstrating only a
vague assertion that the New Contracts had value "in excess
of $1,375,000" and thus failed to prove with specificity the
amount of the new value ESA received. We disagree.

   Below, Hanover asserted, and the bankruptcy court agreed,
that ESA received new value in the form of the New Con-
tracts as a result of the transfer of funds (from Prospect to
ESA to SunTrust to Hanover).11 In finding that the New Con-
tracts constituted new value in excess of the transferred asset,
the $1.375 million cash, the bankruptcy court relied on the
affidavit of ESA’s former Chief Executive Officer, Charles
Jacob Cole, (the "Cole Affidavit") who stated that the "gov-
ernment contracts awarded to ESA had a face amount in
excess of $3.9 million and the New Bonds provided ESA with
the ability to proceed with the new government contracts and
to earn revenues in excess of $1,375,000—the face amount of
the Letter of Credit." (J.A. 584.) The Trustee introduced no
evidence to contradict the Cole Affidavit or to establish any
  11
    The bankruptcy court also concluded that ESA received new value
from Hanover in the form of the New Bonds. Because we conclude that
the bankruptcy court did not clearly err in its finding regarding the value
of the New Contracts, we do not address the bankruptcy court’s determi-
nation regarding the New Bonds as new value.
            In Re: ESA ENVIRONMENTAL SPECIALISTS             17
other measure of value for the New Contracts. Neither before
the bankruptcy court, the district court, nor this court has the
Trustee contended that Hanover’s evidence, the Cole Affida-
vit, was inherently incredible or that Mr. Cole was being
untruthful. The Trustee simply disagreed with Mr. Cole’s con-
clusion.

   Once Hanover offered its uncontradicted evidence that
ESA received new value in excess of $1.375 million—the
amount of the alleged preferential transfer—Hanover did not
need to demonstrate any exact figure beyond that amount.
Hanover only needed to prove with specificity that the New
Contracts had a value at least as great as the amount of the
alleged preferential transfer in order to demonstrate that
ESA’s bankruptcy estate had not diminished as a result of the
transfer. Thus, on the record evidence before the bankruptcy
court that the value of the New Contracts met or exceeded the
amount of the alleged preferential transfer—the $1.375 mil-
lion—the court did not err in concluding that Hanover had
carried its burden to "prove with specificity the new value
given to the debtor." Jet Fla., 861 F.2d at 1559.

   Relatedly, the Trustee also argues that the bankruptcy
court’s finding of fact that the New Contracts constituted new
value in excess of $1.375 million was clearly erroneous.
Although the Trustee disagreed with Hanover’s proposed val-
uation of the New Contracts, the Trustee wholly failed to
present any evidence that contradicts Hanover’s valuation evi-
dence or conflicts with the bankruptcy court’s finding regard-
ing the value of the New Contracts. Once Hanover presented
credible evidence regarding the value of the New Contracts,
the burden shifted to the Trustee to present some competent
evidence supporting his position to defeat Hanover’s motion
for summary judgment. The Trustee did not do so. See Par-
rish ex rel. Lee v. Cleveland, 372 F.3d 294, 308–09 n.17 (4th
Cir. 2004) ("If the movant presents credible evidence that, if
not controverted at trial, would entitle him to a Rule 50 judg-
ment as a matter of law that evidence must be accepted as true
18           In Re: ESA ENVIRONMENTAL SPECIALISTS
on a summary-judgment motion when the party opposing the
motion does not offer . . . evidentiary material supporting the
opposing contention." (quoting 10A Charles Alan Wright et
al., Federal Practice & Procedure § 2727 (3d ed. 1998))).
The Trustee simply failed to carry his burden of persuasion
once Hanover met its burden of proof. Thus, the bankruptcy
court did not clearly err in its finding that the New Contracts
constituted new value in excess of $1.375 million.

   As to the Trustee’s second argument—that any new value
ESA received was not, as a matter of fact, contemporaneously
exchanged for the $1.375 million transfer of funds—the
Trustee conflates two very different concepts, the value of the
New Contracts, which have value in and of themselves, and
the eventual revenues ESA would have received upon perfor-
mance of the New Contracts. While the Trustee correctly
points out that ESA did not receive the actual revenues under
the New Contracts in contemporaneous exchange for the
transfer to Hanover, the Trustee fails to recognize that the
New Contracts had a value in and of themselves in excess of
$1.375 million based on the record in this case. We find no
clear error in the bankruptcy court’s finding of fact that the
flow of funds from Prospect to ESA to SunTrust (for Hano-
ver) and the award of the New Contracts was in fact a "sub-
stantially contemporaneous exchange" of assets. The
bankruptcy court’s finding recognized the ordinary flow of a
commercial transaction in obtaining a loan and conveying its
proceeds to acquire a new asset, which in this case was the
New Contracts. The bankruptcy court did not clearly err in
concluding that ESA received the New Contracts in a substan-
tially contemporaneous exchange for the transfer to Hanover.

  The bankruptcy court therefore properly held that Hanover
carried its burden to prove all the elements of the new value
defense under § 547(c)(1) so as to bar the Trustee from avoid-
ing the transfer of the $1.375 million to Hanover.12
  12
    Hanover asserts that the bankruptcy court also ruled in its favor on
separate equitable grounds. Because we affirm the bankruptcy court’s
              In Re: ESA ENVIRONMENTAL SPECIALISTS                      19
                                   IV

                              Conclusion

   Although the bankruptcy court erred in finding that the ear-
marking defense applied in this case, we find no error in its
determination that Hanover is entitled to the new value
defense under § 547(c) to the Trustee’s claim of a preferential
transfer. We therefore affirm the judgment of the bankruptcy
court awarding summary judgment to Hanover.

                                                            AFFIRMED

TRAXLER, Chief Judge, dissenting:

  Because I believe Hanover was not entitled to summary
judgment on its new-value defense, I respectfully dissent.

  The Bankruptcy Code’s preference section serves two
goals. First, it prevents companies "from racing to the court-
house to dismember the debtor during his slide into bank-
ruptcy." Harmon v. First Am. Bank of Md. (In re Jeffrey
Bigelow Design Group, Inc.), 956 F.2d 479, 487 (4th Cir.
1992) (internal quotation marks omitted). And second, it pro-

application of the new value defense, we address Hanover’s equitable
defense only to note that neither this court nor any other has recognized
that such an equitable defense to a preference action exists. See Norwest
Bank Worthington v. Ahlers, 485 U.S. 197, 206 (1988) ("[W]hatever equi-
table powers remain in the bankruptcy courts must and can only be exer-
cised within the confines of the Bankruptcy Code.") Even the single case
that Hanover cites to support its equitable grounds defense provides it no
support. See Kmart Corp. v. Uniden Am. Corp. (In re Kmart Corp.), 318
B.R. 409, 415 (Bankr. N.D. Ill. 2004) (holding that, apart from threshold
defenses such as "lack of in personam jurisdiction, service of process,
standing, and the like," "the enumerated 547(c) preference exceptions are
the exclusive defenses to liability for an otherwise avoidable preferential
transfer").
20          In Re: ESA ENVIRONMENTAL SPECIALISTS
tects "equality of distribution among creditors." Id. (internal
quotation marks omitted).

   Section 547(c) provides exceptions for certain preferential
transfers, the avoidance of which would not further the pur-
poses of § 547(b). See 11 U.S.C. § 547(b), (c). Section
547(c)(1) provides that a transfer cannot be avoided "to the
extent [it] was . . . intended by the debtor and the creditor to
or for whose benefit [it] was made to be a contemporaneous
exchange for new value given to the debtor; and [it was] in
fact a substantially contemporaneous exchange." 11 U.S.C.
§ 547(c)(1) (emphasis added). The statute defines "new
value," as is relevant here, as "money or money’s worth in
goods, services, or new credit, or release by a transferee of
property previously transferred to such transferee." 11 U.S.C.
§ 547(a)(2).

   The purpose of the § 547(c)(1) exception is "to encourage
creditors to continue to deal with troubled debtors without
fear that they will have to disgorge payments received for
value given." Collier on Bankruptcy ¶ 547.04 (Alan N. Res-
nick & Henry J. Sommer eds., 16th ed. 2012). As the legisla-
tive history demonstrates, § 547(c)(1) was intended to address
the "generic problem that those on the verge of bankruptcy
still need to buy things and the fact that checks are used (with
a brief gap between purchase and payment) ought not render
the payment avoidable as one made for an antecedent debt."
United Rentals, Inc. v. Angell, 592 F.3d 525, 529 (4th Cir.
2010) (alterations and internal quotation marks omitted).
"Protecting contemporaneous exchanges for new value from
avoidance does not harm the preference section’s goal of pro-
tecting the equality of distribution among the debtors because
such exchanges do not diminish the size of the debtor’s
estate." Id.

   The Trustee argues that "Hanover did not sustain its burden
of establishing Hanover’s contemporaneous exchange defense
to the Trustee’s $1.375 million preferential transfer claim."
              In Re: ESA ENVIRONMENTAL SPECIALISTS                    21
Appellant’s Brief at 55. The Trustee contends that even
assuming that the New Contracts constituted new value,
"Hanover failed to present evidence of the extent of the new
value." Id. I agree.

   As stated above, the statute defines "new value," as is rele-
vant here, as "money or money’s worth in goods, services, or
new credit, or release by a transferee of property previously
transferred to such transferee." 11 U.S.C. § 547(a)(2). Under
the New Contracts, ESA did not stand to receive any goods,
services, new credit, or any release of property. It stood to
receive only money. But as the Trustee points out, ESA never
received any money under the New Contracts since ESA did
not complete the work.

   Hanover does not argue, and could not argue, that it pre-
sented evidence that the New Contracts were goods or ser-
vices that could be sold for at least $1.375 million in the mar-
ketplace. Rather, Hanover contends that ESA received "new
value" of at least $1.375 million in the form of the New Con-
tracts because ESA expected to make that much profit by
eventually completing its work under those contracts. See J.A.
584 (Cole affidavit). But regardless of what Hanover hoped
to eventually receive, what it actually received was only a
conditional promise to pay ESA money at some point in the
future. Section 547, however, requires that the debtor’s
receipt of money, goods, services, new credit or property
release be substantially contemporaneous with the debtor’s pay-
ment.1 See In re Teligent, Inc., 315 B.R. 308, 317 (Bankr.
S.D.N.Y. 2004) (explaining that "[a] promise of future ser-
vices . . . does not constitute ‘new value.’"); cf. Norwest Bank
Worthington v. Ahlers, 485 U.S. 197, 204 (1988) (discussing
  1
    Hanover also argues that the bonds themselves constituted new value
of at least $1.375 million to ESA because the face value of the bonds
exceeded that amount. However, the government, not ESA, was the bene-
ficiary on the bonds. If Hanover proved any new value to ESA, it was lim-
ited to $74,071, the premium ESA paid for the bonds.
22            In Re: ESA ENVIRONMENTAL SPECIALISTS
"new value" exception to absolute priority rule and stating
that "[u]nlike ‘money or money’s worth,’ a promise of future
services cannot be exchanged in any market for something of
value to the creditors today").

   Indeed, the facts of this very case demonstrate why receipt
of a conditional promise for payment at some indefinite future
time does not constitute receipt of "new value" in the amount
of the promised payment.2 In a "new value" transaction, the
debtor’s payment does not reduce the size of the estate
because the money paid by the debtor is replaced by money,
goods, services, new credit, or property releases of equivalent
value. See Angell, 592 F.3d at 529. Here, in contrast, Hanover
successfully obtained $1.375 million from the estate without
replacing it with equal value.3 In so doing, Hanover jumped
ahead of ESA’s other unsecured creditors and received far
more payment via the letter of credit than it otherwise could
have received in bankruptcy. Thus, the bankruptcy court
erred, in my view, in concluding that Hanover established the
new-value defense.4

   I therefore would reverse the district court order affirming
the bankruptcy court.
  2
     Cole’s affidavit supports Hanover’s factual premise that ESA expected
to make a profit of more than $1.375 million by performing the work
under the New Contracts, but it does not establish the legal conclusion
ESA actually received at least $1.375 million in new value.
   3
     ESA’s unrealized expectation that it would profit at some point in the
future under the New Contracts shows that the contracts may have had
"value" in traditional business/commercial parlance. ESA’s expectation
did not replenish the estate, however, and thus the New Contracts did not
amount to "new value" within the meaning of § 547(c).
   4
     For the reasons stated in the majority opinion, I also believe the bank-
ruptcy court erred in concluding that Hanover established the earmarking
defense. See ante at 8-12. Additionally, I do not read the bankruptcy court
order as ruling for Hanover on equitable grounds independent of the ear-
marking and new-value defenses.
