Preferences

A trucking company went into bankruptcy after its insurer paid a substantial sum to settle a personal-injury case. Other claimaints claimed that the payment was a preferential transfer, and the Fifth Circuit agreed that the claim could proceed:

As the Supreme Court explained in Begier, “[b]ecause the purpose of the avoidance provision is to the preserve the property includable within the bankruptcy estate . . . ‘property of the debtor’ subject to the preferential transfer provision is best understood as that property that would have been part of the estate had it not been transferred before the commencement of bankruptcy proceedings.” The Policy Proceeds would have been property of the estate at the time the petition was filed if they had not been transferred. Thus, for the purposes of the avoidance provision as stated in Begier, the Policy Proceeds are the property of the estate.

Law Office of Rogelio Solis PLLC v. Curtis, No. 23-40125 (Oct. 6, 2023) (citations omitted).