Introduction to Preferences
This lesson surveys the general elements of an avoidable preference and walks through the basic analysis one must employ to determine whether a preference is avoidable.
One of the bedrock policies underlying the bankruptcy system is equality of distribution among similarly situated creditors. Nowhere is this policy brought into starker focus than in the law of avoidable preferences, codified in Bankruptcy Code § 547.
I. Preference Defined
At a high level, a preference is a prebankruptcy transfer from the debtor to a creditor that, if not set aside in bankruptcy, would put the recipient creditor in a better position than other, similarly situated creditors. If...