Unfair Preference
A payment or transfer to a creditor before insolvency that may be recoverable by a liquidator because it preferred that creditor over others.
What a preference is
An unfair preference arises where, in the period before a company's liquidation, a creditor received a payment or transfer that put it in a better position than other unsecured creditors would otherwise have been. In broad terms, the concern is that one creditor was paid ahead of the general body of creditors at a time when the company was struggling. A liquidator may seek to recover such amounts for the benefit of all creditors.
What it can mean for a creditor
A creditor who received a payment that is later treated as an unfair preference may be asked to repay it, though various defences can apply depending on the circumstances. This is a technical area. This is general information only and not legal or financial advice. If a liquidator has raised a preference claim against you, you can refer a debt and we can point you in the right direction.
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