When a company files for bankruptcy, certain payments made within the preference period may be subject to recovery. However, receiving a preference demand does not automatically mean the payment must be returned
Creditors may have important defenses under the Bankruptcy Code, including ordinary course of business, contemporaneous exchange for new value, subsequent new value, certain secured transactions, and applicable statutory thresholds.
Payment histories, invoices, contracts, shipping records, and other documentation can be critical in determining whether a preference claim can be reduced or eliminated.
If your company receives a preference demand or lawsuit, qualified bankruptcy counsel should review the matter promptly to identify available defenses and protect your rights.