Preferential Payment Outside 90 days window

[Atlanta7]

Can a debtor make preferential payment of a large amount ( $50,000) to only one unsecured creditor and none to other unsecured creditor and a result becomes insolvent , as long as it's done more than 90 days (say 120 days) before filing chapter-7?

[justbroke]

I will only say that it depends on whether it's an insider. Even then, a preference action is only taken against the party receiving the preference. From what I understand, if it was fraudulently done to hide, hinder, or delay the bankruptcy estate then that's a different thing. For example, you owe your cousin $50K and the terms were to pay $500/month for 120 months. But you see bankruptcy coming and you immediately pay the remainder ($50K) 120 days prior to filing. That is likely an insider and the rules are different for insiders.

I can't tell you if that rises to the level of fraud. Usually the panel trustee will only seek to claw back the money from the party that received the money.

Your question is really a technical and very legal question which I can't resolve. Preferences happen a lot in bankruptcy. The legal question arises as to whether the (panel) trustee can claw it back, and whether it rises to another level requiring referral to the UST.

[despritfreya]

Who was the creditor? Institutional lender, credit card, medical bill, supplier, friend, family member, etc.

Please note, it is generally up to the Trustee to determine if there should be an attempt to recover the payment.

Des.