Fifth Circuit: Pre-petition Payout of Insurance Proceeds Should Be Classified As a 'Transfer of An Interest'

In upholding the bankruptcy court's determination that the payment of insurance proceeds could be such a transfer, the Fifth Circuit underscored the complex interplay between state law, bankruptcy law and the rights of creditors in bankruptcy proceedings.

6 minute read December 01, 2023 at 12:07 AM
By
Francis J. Lawall and Brenden S. Dahrouge
Fifth Circuit: Pre-petition Payout of Insurance Proceeds Should Be Classified As a 'Transfer of An Interest'

Section 547 of the Bankruptcy Code provides for the potential recovery of transfers of a debtor's property occurring within 90 days of bankruptcy. Typically, preference actions involve payments to vendors who previously did business with the debtor on credit.

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