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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.



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The Bankruptcy Code should be amended to specifically include tax elections in the definition of voidable preferences.
States that have enacted versions of the Uniform Act typically have enacted a voidable preference provision that permits a receiver to avoid any pledge of assets made within a certain period (in some cases up to one year) prior to commencement of the receivership if the pledge was made with the intent of giving a preference and the creditor had reasonable cause to believe that the preference would occur.
These measures dealt with voidable preferences in bankruptcy law.
 
 
 
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