Subsequent-Advance Rule Law and Legal Definition

Subsequent advance rule is a principle of bankruptcy law that a preferential transfer by the debtor will not be avoided or rescinded by the debtor's bankruptcy trustee if

(1) the creditor extended new value to the debtor after receiving the preferential transfer

(2) the new value is unsecured, and

(3) the new value remains unpaid after its transfer.

The principle is codified at 11 USCS § 547(c)(4).