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ANALYSIS: Why Preference Litigation Will Proliferate in 2022

March 18, 2022, 9:00 AM

The 2020 surge in bankruptcy filings could result in a wave of related adversary proceedings asserting preference claims this year as applicable statute of limitations dates approach.

Creditors in the 2020 bankruptcy cases could find themselves becoming preference defendants in 2022. Therefore, they should pay special attention to recent amendments to the Bankruptcy Code concerning preference claims and to cases interpreting these amendments.

What Is a Preference?

In bankruptcy cases, the trustee or Chapter 11 debtor has the power to avoid and recover certain prepetition transfers made by the debtor from recipients of those transfers.

One type of avoiding power ...