voidable preference

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Voidable Preference

The transfer of assets to a secured creditor less than 90 days before a bankruptcy filing. The voidable preference means one secured creditor is favored over others. After bankruptcy is filed, the trustee in bankruptcy may prevent this creditor from receiving the assets and instead transfer them to another creditor.

voidable preference

In bankruptcy law, the notion that a transfer of property within a certain time period before filing for bankruptcy may be set aside,because it takes property out of the bankruptcy estate and may diminish the money available for unsecured creditors.There does not have to be any showing of fraudulent or dishonest intent.

References in periodicals archive ?
In addition, the Court rejected the Commissioner's request for findings that the Company's use of the NOLs and worthless stock deduction were voidable preferences and/or fraudulent transfers.
These measures dealt with voidable preferences in bankruptcy law.
But Hardy shudders to think what would have happened if a large insurer had gone into liquidation under the original interpretation of voidable preferences.