Trust Fund Taxes: Trust Fund Tax Payments Are Not Preferences Under the Bankruptcy Code.

When a company files a bankruptcy petition, a variety of potential claims against its creditors arise under the Bankruptcy Code. Preferential transfers are an example; under the Bankruptcy Code, transfers made within ninety days of the bankruptcy filing can be recovered if a creditor received an interest in a debtor’s property on account of a pre-existing debt while the debtor was insolvent, and the transfer of property puts the creditor in a better position than it would have had in a Chapter 7 liquidation. 11 U.S.C. § 547(b). There are some additional nuances, including a longer preference period for insiders and a variety of potential defenses.… Read More