Preference Action

Preference action refers to a legal process used in bankruptcy cases, where a creditor seeks to recover funds from a debtor that were paid before the debtor filed for bankruptcy. The goal is to ensure fair treatment among all creditors. If a creditor received a payment that puts them ahead of others, the court can reverse that payment, allowing the funds to be redistributed equitably among all creditors. This ensures that no single creditor gains an unfair advantage during the bankruptcy process, promoting fairness and compliance with bankruptcy laws.