Powerine obtained a $250.6 million line of credit from a syndicate. The loan was secured by most of Powerine's personal property. The security agreement provided that the collateral would serve as security for all letters of credit that 'have been, or are in the future, issued on the account of Debtor.' D sold crude oil to Powerine. Powerine designated D as beneficiary of two irrevocable standby letters of credit. They expired in April 1984 and totaled approximately $ 8.7 million. D billed Powerine $3.2 million for oil it had delivered in December and January. Powerine paid and filed chapter 11 less than 90 days later. Ps eventually brought an action to recover the payment, claiming it was a preference under 11 U.S.C. § 547(b). The court held that the transfer was protected by the 'contemporaneous exchange for new value' exception of 11 U.S.C. § 547(c)(1). The Bankruptcy Appellate Panel (BAP) held that the payment wasn't a preference because it didn't enable D to recover more than it would in a chapter 7 liquidation. The BAP reasoned D would have been paid in full because it would have drawn on the letters of credit. P appealed.