Menu

You do business with a person associated with several companies, and he pays you with checks written from one company's bank account. Later the company files bankruptcy. Can you breathe a sigh of relief because you provided valuable goods or services in return for the payments, and before the company filed bankruptcy?

No area of bankruptcy law is less understood, and causes more shock and upset, than the law pertaining to the recovery of preferential transfers, referred to as “preferences.”

The first time a business is exposed to the law of preferences is usually when it receives an unpleasant letter, or a complaint initiating a lawsuit, demanding the return of a payment the business received on a legitimate debt from a company that later filed bankruptcy. The payment demand comes from a bankruptcy trustee or a company in bankruptcy,

It is not often that we see history unfolding before our eyes. News, yes, we have plenty of that. But seeing a real, live shift in how business is done, complete with the exit of many household-name firms from the scene, is to witness history, nothing less.

The list of retail bankruptcies in the past 24 months includes everything from trendy retailers which catered to an ever-shifting millennial market, to “walking dead” retailers whose time had passed but were unable to figure out how to adapt.

What happens when two sections of the Bankruptcy Code seem to contradict each other? 

That can happen when the owner of rental property files for bankruptcy and wants to sell it without the lease, to get a better price.