138k views
2 votes
John's brother, Phil, loaned him $10,000 to start his business. John didn't do too well and planned to file for bankruptcy. In May, he gave Phil his car worth $8,000 to satisfy the debt. John filed his petition in November. After liquidation, if the car were included in his assets, every unsecured debtor would have received 85% of the debt owing to him. Will this be a voidable preference?

User James Adam
by
7.7k points

1 Answer

2 votes

Answer:

No, this is not a voidable preference. John didn't treat Phil's loan differently and didn't give him Phil preferential treatment over other creditors.

A voidable preference happens when a debtor decides to pay, either in cash or by transferring assets, a debt just before filing for bankruptcy.

In this case John transferred his car to Phil in May and he filed for bankruptcy in November.

User Favas Kv
by
8.2k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.