Suppliers of goods and services on credit understand that the recipient may be unable to pay for some or all of the goods provided or the services rendered. However, many of these suppliers have a difficult time "giving back" money previously received from a debtor who has filed for protection under the United States Bankruptcy Code. Judicial interpretation of the broadly written bankruptcy law has made it difficult to defeat a preference action instituted by a trustee in bankruptcy or a debtor-in-possession. As a result, any supplier who has several transactions with a debtor during the preference period is particularly vulnerable.
Charles E. Reynolds,
Maginot Line Defenses to a Preference Action? 11 U.S.C. § 547(c )(2) & (c )(4),
U. Rich. L. Rev.
Available at: http://scholarship.richmond.edu/lawreview/vol21/iss2/5