CBS Fraudulent Transfers & Avoidance Actions 2

Question 1

What is the look-back period for avoiding preferential transfers to insiders under Section 547 of the Bankruptcy Code?

Accepted Answer

1 year

Answer

For transfers to insiders (as defined in Section 101), the preference look-back period extends to 1 year before the petition date, compared to 90 days for non-insiders.

Question 2

Under the 'ordinary course of business' defense to a preference claim under Section 547(c)(2), a transfer may be protected if it was made:

Accepted Answer

In the ordinary course of business or financial affairs of both the debtor and transferee, or according to ordinary business terms

Answer

The ordinary course of business defense protects transfers consistent with the parties' established payment history or standard industry practices.

Question 3

A trustee seeks to avoid a lien under Section 547 as a preference. Which element is NOT required to establish a preferential transfer?

Accepted Answer

Fraudulent intent by the debtor

Answer

Unlike fraudulent transfer claims, preference avoidance under Section 547 does not require any showing of fraudulent intent — it is based solely on the effect of the transfer.

Question 4

Under Section 549 of the Bankruptcy Code, the trustee may avoid post-petition transfers of estate property that are:

Accepted Answer

Not authorized under the Bankruptcy Code or by the court

Answer

Section 549 allows the trustee to avoid unauthorized post-petition transfers of property of the estate, protecting the estate from dissipation after filing.

Question 5

The 'contemporaneous exchange for new value' defense under Section 547(c)(1) protects a preference payment when:

Accepted Answer

The transfer was intended and actually resulted in a contemporaneous exchange for new value given to the debtor

Answer

This defense applies when both parties intended a simultaneous exchange and new value was actually provided in exchange for the payment, preserving the economic neutrality of the transaction.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Fraudulent Transfers & Avoidance Actions 2