unfair preference

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unfair preference

a payment or transaction designed to favour one creditor over others in the event of a forthcoming INSOLVENCY, so an ordinary payment of an ordinary legitimate debt is not unfair, but the granting of a security allowing it to be repaid in full in the event of insolvency is unfair to the general body of creditors. The trustee of the insolvent estate is allowed to unravel such transactions subject to detailed rules and time limits.
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