LG.. The distinction between preferences and fraudulent transfers raises another interesting question. Both preferences and fraudulent transfers are Code-created rights. However, in Granfinanciera v. Nordberg, 492 U.S. 33 (1989), the Supreme Court held that fraudulent transfers did not involve "public rights." Is there a distinction between them? One distinction is that fraudulent transfer law exists outside of bankruptcy, while preference law does not. A preference is defined by the fact that it occurred on the eve of bankruptcy, while a fraudulent transfer can happen at any time. A fraudulent transfer action recovers property rightfully belonging to the debtor, while a preference action is designed to provide equality of distribution between creditors.
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