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 ?
i) to allow a non-debtor swap participant or the trustee to terminate a swap agreement so that a swap agreement could only continue after the bankruptcy is filed only by mutual consent of the non-debtor swap participant and the trustee; (ii) to permit immediate termination in order to minimize exposure to market volatility; and (iii) to address the need for swap participants to be able to close out existing transactions without fear that (a) closing out swaps would violate the stay, (b) a debtor would opportunistically reject unfavorable swaps and assume favorable ones; or (c) the transactions would be challenged as voidable preferences.
Bankruptcy prediction models, voidable preferences and fraudulent conveyances are each covered in this chapter.
A check for voidable preferences or fraudulent transfers likewise yields nothing of consequence.