Within how many days may payments received around bankruptcy notice need to be returned to the bankruptcy court?

Within how many days may payments received around bankruptcy notice need to be returned to the bankruptcy court?

• A. 90 days
• B. 30 days
• C. 60 days
• D. 120 days

Answer: (A)

The idea being tested is the preference look-back period in bankruptcy, which decides how far back payments to creditors can be reclaimed by the estate. If the debtor pays a creditor within 90 days before the bankruptcy filing, those payments may be avoided and returned to the bankruptcy court to be distributed to all creditors. This 90-day window prevents creditors from getting special treatment as insolvency approaches; insiders get a longer window (one year), but for ordinary creditors the standard is 90 days. So, the correct period is 90 days.

The idea being tested is the preference look-back period in bankruptcy, which decides how far back payments to creditors can be reclaimed by the estate. If the debtor pays a creditor within 90 days before the bankruptcy filing, those payments may be avoided and returned to the bankruptcy court to be distributed to all creditors. This 90-day window prevents creditors from getting special treatment as insolvency approaches; insiders get a longer window (one year), but for ordinary creditors the standard is 90 days. So, the correct period is 90 days.