Preference Claims in Bankruptcies (A Primer for Manufacturers’ Reps)


Imagine you are a representative for a principal who is struggling financially. You are owed commissions and have been patient in dealing with the principal’s slow pay. After many promises, you push the principal and finally, you receive a long-awaited commission check and life is good.

imageWithin three months of your receipt of the commission check (or checks), your principal files for bankruptcy protection. Several months later you receive a letter from the trustee appointed in the bankruptcy claiming your receipt of commissions was “preferential” and demanding that the payments you received be returned. You say to yourself, “How can … Read the rest