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A Transfer Enabling a Creditor to Receive More Than It Would in Chapter 7

Learn about the requirement that, to be avoidable as a preference, a transfer must enable a creditor to receive more than it would in chapter 7.

Transcript

As we've discussed in other lessons, the Bankruptcy Code generally empowers the trustee or debtor-in-possession to set aside and recover, for the estate, certain prebankruptcy transfers to creditors. These transfers are called preferences. There are several requirements that any transfer must satisfy to be avoidable as a preference. Here, we'll focus on one, which we'll call the relative-benefit test.

I. Introducing the Relative-Benefit Test

Under this test, the court must find that the...

Lessons

    • 1. Welcome to Bankruptcy
    2. Foundations of Bankruptcy
    3. The Estate and the Automatic Stay
    4. Creditors, Claims, Discharge, and Priority
    5. Chapter 7 Liquidation
    • Chapter 7 Panel Trustee
    • Distribution of Estate Property in Chapter 7
    • Discharge in Chapter 7
    • Personal-Property Collateral in Chapter 7
    • General Grounds to Dismiss a Chapter 7 Case
    • Introduction to the Means Test and Dismissals or Conversions for Abuse
    6. Debt Adjustment in Chapter 13
    • Eligibility to File for Chapter 13
    • The Estate in Chapter 13
    • Introduction to the Chapter 13 Plan of Debt Adjustment
    • Terms Permitted in a Chapter 13 Plan
    • Chapter 13 Confirmation Requirements: Treatment of Secured Claims
    • Chapter 13 Confirmation Requirements: Treatment of Unsecured and Priority Claims
    7. Preferences
    • Introduction to Preferences
    • A Transfer to a Creditor or for a Creditor's Benefit Made for or on Account of an Antecedent Debt
    • A Transfer Enabling a Creditor to Receive More Than It Would in Chapter 7
    • The Net-Benefit Rule
    • Contemporaneous Exchanges for New Value
    • Transfers in the Ordinary Course of Business
    • Subsequent New Value