PREFERENTIAL TRANSFER

preferential transfer. Bankruptcy. A prebankruptcy transfer made by an insolvent debtor to or for the benefit of a creditor, thereby allowing the creditor to receive more than its proportionate share of the debtor’s assets; specif., an insolvent debtor’s transfer of a property interest for the benefit of a creditor who is owed on an earlier debt, when the transfer occurs no more than 90 days before the date when the bankruptcy petition is filed or (if the creditor is an insider) within one year of the filing, so that the creditor receives more than it would otherwise receive through the distribution of the bankruptcy estate. • Under the circumstances described in 11 USCA § 547, the bankruptcy trustee may recover — for the estate’s benefit — a preferential transfer from the transferee. — Also termed preference; voidable preference; voidable transfer; preferential assignment. Cf. FRAUDULENT CONVEYANCE(2). [Cases: Bankruptcy 2601–2623. C.J.S. Bankruptcy §§ 135–151, 166.]

[Blacks Law 8th]