this arises where a bankrupt pre bankruptcy has paid one or more creditors money or transferred an asset to them in priority to other creditors. A trustee can claw back this transaction once they establish 5 criteria to enable all creditors to share.
a payment received from a debtor by a creditor in the ninety days before the debtor's bankruptcy filing
a transaction which has the effect of placing a creditor in a better position if the company goes into liquidation than if the transaction had not occurred
priority of payment given to one or more creditors by a debtor; a transfer of property by a bankruptcy debtor to an insider more than 90 days before but within one year after the filing of the bankruptcy petition.
Paying or securing to one or more creditors, by an insolvent debtor, of all or part of an antecedent debt to the exclusion of other creditors. Under the U.S. Bankruptcy Code such payment is a preference if to a regular creditor within 90 days or to an insider within one year of insolvency.
A transfer to a creditor in payment of an existing debt made within certain time periods before the commencement of the case (anywhere from one year to 3 months prior to filing the bankruptcy). The Trustee may recover preferences for the benefit of all creditors of the estate. Therefore, if a friend or relative is paid and not other creditors, the Trustee can demand that the friend or relative return all funds received within on year prior to filing the bankruptcy.
A legal remedy available to a Liquidator in a liquidation and Trustee in Bankruptcy in a bankruptcy case to review payments made to third parties in the period leading up to the insolvency. It is necessary to demonstrate that the third party has been put into a better position than they would otherwise have been in had that transaction not have occurred. Upon proving the matter to the court, the court can make an order that the third party make a repayment of any sum that they have been deemed to have received in preference.
A transfer that prefers one creditor over other creditors in the same class, avoidable by statutory trustee powers.
When a trustee or debtor in possession proves that a transfer: 1. Of the debtor's assets were made; 2. Was made for the benefit of a creditor; 3. Was for or on account of an antecedent debt; 4. Was made while the debtor was insolvent; 5. Was made within 90 days of the petition for relief (one (1) year if the transfer is to an insider); 6. Gave the creditor more than the creditor would otherwise receive in a Chapter 7 liquidation.
A term primarily used in the bankruptcy court which refers to the act of paying one creditor to the exclusion of or disproportionate to other creditors.
A payment or other transaction in the six month to two year period preceding a liquidation, administration or bankruptcy, which places a creditor or a person connected with the insolvent, respectively, in a better position than they would have been otherwise. A liquidator, administrator or trustee in bankruptcy may recover any sums which are found to be preferences.
a transfer to a creditor (related or unrelated to the debtor)for the payment of an existing debt within the statutory time period prior to the commencement of a bankruptcy case. Preferences may be recovered by the Trustee for the benefit of all creditors; the most common preferences are payments to relative or friends made within 60 days to 1 year prior to the filing of the bankruptcy petition.
The payment of money or the granting of security by an insolvent debtor that benefits one or more creditors to the detriment of the other creditors.
A transfer of property of the debtor to a creditor made immediately prior to the debtor's bankruptcy, which enables the creditor to receive more than it would have received from the bankruptcy. A preferential transfer must be made while the debtor is insolvent and as payment for a debt that existed prior to the transfer of property.
A transfer to a creditor in payment of an existing debt made with certain time periods before the bankruptcy was filed. Preferences may be recovered by the trustee for redistribution among the creditors.
One of the categories or classes that the beneficiary of an immigrant petition is placed into. The preference assigned depends on the type of petition and other factors. The petition approval notice shows the preference. Example, a petition for the spouse of a permanent resident will be in the Family 2A preference. A petition for a skilled worker (at least 2 years experience required) will be in the Employment 3rd preference.
A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in the debtor's chapter 7 case.
A payment or other transaction made by an insolvent company or individual which places a creditor in a better position than they would have been otherwise. A liquidator, administrator or trustee in bankruptcy may recover sums which are found to be preferences. If the transactions took place within a period of either two years (where the creditor is a connected person) or six months (in other cases) of the insolvency.
(U.S. bankruptcy based) A payment to or for the benefit of a creditor made within 90 days prior to filing the bankruptcy petition. The preference period is one year if the payment is to an insider, such as an officer of the debtor or company, and can be garnished or rescinded by a court appointed trustee to the bankruptcy case.
A transfer to a creditor in payment of an existing debt made within certain time periods before the commencement of the case. Preferences may be recovered by the trustee for the benefit of all creditors of the estate.
An arm's length transaction occurring within three months prior to the date of bankruptcy which prefers one creditor over another, or a non-arm's length transaction occurring within 12 months prior to the date of bankruptcy having a similar effect. Preferences are reviewable by a trustee in bankruptcy and can be set aside, thus recovering for the benefit of all creditors payments made or assets taken out of the estate prior to bankruptcy.
Under section 239 of the Insolvency Act 1986, a preference arises where within six months (or two years where the creditor is a connected person) of an insolvent liquidation one or more of the company's creditors has been put in a better position than he would have been in as a result of the insolvency. In simple terms, this means that the company has chosen to pay a creditor to avoid him losing out as an unsecured creditor in the insolvency. In such cases the liquidator or receiver may set it aside where a desire to give a preference is demonstrated - this is assumed in the case of a connected person.
a payment by a debtor made during a specified period (90 days or one year) prior to the filing that favors one creditor over others. Preference payments can usually be recovered and returned to the debtor's estate.
A payment made by a debtor to a creditor within a defined period prior to filing for bankruptcy -- within three months for arms-length creditors (regular commercial creditors) and within one year for insider creditors (friends, family members, and business associates). Because a preference gives the creditor who received the payment an edge over other creditors in the bankruptcy case, the trustee can recover the preference (the amount of the payment) and distribute it among all of the creditors.