preferential transfer

preferential transfer
preferential transfer
Certain transfers or payments made to creditors within 90 days before the bankruptcy is filed may be reversed and recovered by the bankruptcy court. Where the creditor is an insider (relative, shareholder, etc.) the 90 days is extended to one year. The recovery of these preferential payments is a method to provide an equal distribution among creditors of the same class.
A debtor owes many creditors but pays one "friendly creditor" in full just before filing the bankruptcy petition. This payment could most likely be recovered by the trustee to be spread among all creditors. (Bernstein's Dictionary of Bankruptcy Terminology)

United Glossary of Bankruptcy Terms 2012.

preferential transfer
Certain transfers or payments made to creditors within 90 days before the bankruptcy is filed may be reversed and recovered by the bankruptcy court. Where the creditor is an insider (relative, shareholder, etc.) the 90 days is extended to one year. The recovery of these preferential payments is a method to provide an equal distribution among creditors of the same class. A debtor owes many creditors but pays one "friendly creditor" in full just before filing the bankruptcy petition. This payment could most likely be recovered by the trustee to be spread among all creditors.

US Bankruptcy 2012.


Glossary of Bankruptcy.

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Look at other dictionaries:

  • preferential transfer — USA preference, Also known as a preferential transfer. A transfer made by an insolvent debtor to a creditor in payment of a preexisting debt within 90 days before the date when the bankruptcy petition is filed (or if the creditor is an insider,… …   Law dictionary

  • preferential transfer — A transfer of property made by an insolvent debtor to one creditor to the exclusion of others. 29 Am J Rev ed Insolv § 82. An act of bankruptcy; a transfer of any of the property of a creditor for or on account of an antecedent debt, made or… …   Ballentine's law dictionary

  • preferential transfer — See preference preferential assignment …   Black's law dictionary

  • preferential transfer — See preference. American Banker Glossary …   Financial and business terms

  • preferential lien — A lien obtained under circumstances which makes it a preferential transfer and subject to being avoided. (Bernstein s Dictionary of Bankruptcy Terminology) United Glossary of Bankruptcy Terms 2012. preferential lien A lien obtained under… …   Glossary of Bankruptcy

  • preferential — pref·e·ren·tial /ˌpre fə ren chəl/ adj 1: of or constituting a preference a preferential transfer 2: giving preference to union members esp. in hiring a preferential shop 3: showing preference these creditors may obtain preferential …   Law dictionary

  • bankruptcy — /bangk rupt see, reuhp see/, n., pl. bankruptcies. 1. the state of being or becoming bankrupt. 2. utter ruin, failure, depletion, or the like. [1690 1700; BANKRUPT + CY] * * * Status of a debtor who has been declared by judicial process to be… …   Universalium

  • Unfair preference — In many legal systems, where a person or company transfers assets or pays a debt to a creditor shortly before going into bankruptcy, that payment or transfer can be set aside on the application of the liquidator or trustee in bankruptcy as an… …   Wikipedia

  • trustee — an agent of the court who manages the property of the debtor for the benefit of the creditors. The court appoints a trustee in most Chapter 7 cases and in Chapter 11 cases when it determines that the debtor s management should not remain in their …   Glossary of Bankruptcy

  • avoidance powers — Rights given to the bankruptcy trustee or the debtor in possession to recover certain transfers of property such as preferences or fraudulent transfers or to void liens created before the commencement of a bankruptcy case (SA Bankruptcy.com)… …   Glossary of Bankruptcy

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