Fact Pattern 30-1B
In January,Jazz Dance Studio owes Kay,its musical director,$1,800 for cur?rent wages,receives $700 as a down payment for dance lessons from Lora,and pays a Music,Inc. ,a sheet music supplier,$1,500 of $3,000 owed.In February,the studio files a petition in bankruptcy for relief through a liquidation.
-Refer to Fact Pattern 30-1B.Based on the size of the studio's estate in bank?ruptcy,each of Jazz's creditors will get only 10 percent of their claims.Regarding the payment to Music,Inc. ,the trustee may

Question

Quizplus · Accepted Answer

A voidable preference is a payment made by the debtor to a creditor within 90 days before filing for bankruptcy that gives that creditor an advantage over other creditors. In this case, Jazz Dance Studio paid Music, Inc. $1,500 of $3,000 owed in January, which falls within the 90-day window. As a result, the trustee may seek to recover the payment as a voidable preference to ensure that all creditors receive an equal distribution of the estate's assets.

Fact Pattern 30-1B In January,Jazz Dance Studio Owes Kay,its Musical Director,$1,800 for Cur?rent