2. Proofs of Claim - In order to participate in a distribution from the bankruptcy estate as a general unsecured creditor, the bank generally must file a timely proof of claim that sets forth the basis for the debt. The time to file proofs of claim is limited and must be filed before the noticed bar date.
3. Preferential Payments - The law is designed to lessen the likelihood that the debtor will plan to and actually pay certain creditors shortly before the bankruptcy filing. These “preferred” creditors are often “insiders”, (family members and business partners) or certain trade creditors the debtor needs to rely on in the future or other creditor the debtor wants to protect from financial loss. Payments made on old debts to insiders when the debtor is insolvent are recoverable going back one year prior to the bankruptcy petition or 90 days for payments made to non-insiders. If presented with a demand for return of a preference, there are numerous defenses that might apply. Most preference actions, even strong ones, are often settled for less than the demand.