5. Defining Insolvency Terms

Preferences

When a company makes a payment to another party, usually within 6 months of entering into liquidation but sometimes longer, there is a good chance that the payment might be clawed back by the liquidator because it is deemed to be an unfair preference. This is because it is considered to be a transaction which provides an unsecured creditor of the company a benefit which is above that which other creditors received or are likely to receive in the Liquidation.