preferential debt payment
- A payment made to a creditor within a specific period before declaring bankruptcy, favoring the creditor over others in a Chapter 7 case
- Due to their longstanding relationship, the debtor made a preferential debt payment to the small business before filing for bankruptcy.
- The non-profit made a preferential debt payment to a volunteer who had loaned them money, to prevent losses to him if they became insolvent.
- Facing bankruptcy, the company made a preferential debt payment to its longest-serving supplier to ensure it received more than others in the Chapter 7 case.