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Your business provided goods or services to another company.
Shortly thereafter, that company then files for bankruptcy, and
owes your business substantial sums of money. After the filing of
the bankruptcy action, you then receive a letter from counsel
demanding that your business return
all of the money the
debtor paid to you in the 90 days before it filed for
bankruptcy.
Can this really be true?
Unfortunately, it happens frequently. Under Section 547(b) of the Bankruptcy Code, a
debtor may avoid a transfer it paid to creditors, trade vendors,