VIDEO: What Happens if a Creditor Receives Preference Demand in a Bankruptcy Case?

In this video, Lisa Sumner, creditors' rights attorney with Nexsen Pruet, talks about how to respond when you receive a demand to pay back a preferential transfer in a bankruptcy case.

A primary goal of the federal Bankruptcy Code is to promote a fair distribution of the debtor’s assets among creditors. One way the Code does this is by giving the debtor or bankruptcy trustee the power to take or claw back payments the debtor made to so-called preferred creditors before the bankruptcy petition date, and redistribute those funds to the larger pool of creditors according to the Bankruptcy Code’s payment priority structure. Generally speaking, a creditor who receives a greater payment than other creditors in the same priority class must disgorge the payment so all similarly situated creditors can share the funds equally or on a pro rata basis.

VIDEO: What Happens if a Creditor Receives Preference Demand in a Bankruptcy Case?

In this video, Lisa Sumner, creditors' rights attorney with Nexsen Pruet, talks about how to respond when you receive a demand to pay back a preferential transfer in a bankruptcy case.

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