Legal Question in Bankruptcy in Pennsylvania

Preferential payments

Is there such a thing as preferential payments in bankruptcy law? If a company goes bankrupt, who decides which of his customers will be paid?

If a company goes bankrupt and they have paid me $11,000 for services rendered, but they still owe me $9,000, can they request part of that $11,000 back because of prefential payments? Also, can I or will I ever get payment of $20,000 which is what the company owes me?

Thank you.


Asked on 6/08/04, 10:28 am

1 Answer from Attorneys

Re: Preferential payments

Payment made by the debtor in the last 90 days before the bankruptcy filing may be deemed to be preferential payments. There are defenses to this under the U.S. Bankruptcy Code. So, yes, the debtor can sue for the $11,000 already paid even if it still owes you $9,000.

All this is separate from any claim for money still owed to you. The purpose of the preference claims, in fact, is to increase the pool of money that can be distributed prorata to creditors.

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Answered on 6/08/04, 11:08 am


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