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Money Talks
Editor's Note: This is the sixth article in an eight-- part series of information designed to help agents and
manufacturers protect their interests both before and after bankruptcy is filed.
Insider Status and The Reach-Back Power of the Court
The trustee may avoid (force the recipient to transfer the property to the bankruptcy estate) certain transfers that were made by the debtor. For example, the trustee may avoid certain transfers made by the debtor while the debtor was insolvent or when the debtor was close to filing bankruptcy (usually within 90 days for "non-insiders" and within 365 days for "insiders."
An "insider" is a person or entity with a certain close relationship to the debtor. Transactions between the debtor and insiders are more closely scrutinized than other transactions.
An insider may be a general partner, an affiliate of a general partner, a director or officer of a corporation, a relative, a managing agent, an affiliate of a managing agent, or another person with management responsibilities. Thus, an agent who participates in the management of a business is exposed to the risk of having to transfer to the bankruptcy estate assets transferred to it (or equal value) on or within 365 days before the date the petition...