Voidable Preference

Last Updated: Jun 7, 2019

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A voidable preference (also called an "unfair preference") is a legal term arising in bankruptcy law where a person or company transfers assets or pays a debt to a creditor shortly before going into bankruptcy. These payments can be clawed back/returned to the estate in a bankruptcy if it can be shown the person or company who received the payment was treated unfairly (better) than other creditors in a similar position. The look back period is typically 90 days for these payments but can be up to one year if it involves an insider at the company.

American Bankruptcy Institute article:
http://www.abi.org/abi-journal/preference-avoidance