
Preferential Transactions
Preferential transactions in insolvency law refer to transactions made by a financially struggling company that favor one creditor over others shortly before the company declares insolvency. These transactions can include paying off certain debts or transferring assets to specific creditors. The law aims to prevent unfair advantages that could harm other creditors, ensuring an equitable distribution of the company's remaining assets. If identified, these transactions may be reversed or undone during the insolvency proceedings to maintain fairness among all creditors.