The Net-Benefit Rule
Learn about the net-benefit rule that governs the amount of an avoidable preference in the context of inventory or accounts receivable securing a claim.
In other lessons, we learned that the Bankruptcy Code generally empowers the trustee or debtor-in-possession to avoid and recover, for the estate, certain prebankruptcy transfers to creditors. These transfers are called preferences. If a transfer to a creditor satisfies the general elements of a preference, it's avoidable, except insofar as the creditor has a defense to avoidance. In this lesson, we'll talk about one very helpful and, indeed, sensible defense to preference avoidance. We'll...