ABI Consumer Bankruptcy
Reform Forum

ABI Preference Survey No. 1
Credit Providers


1. To what extent do the preference laws accomplish the objective of equitably redistributing monies paid to creditors by an insolvent debtor shortly before a bankruptcy filing?

Frequency
Valid Percent
Valid Not at all 92 19.7%
A little 151 32.4%
Somewhat 161 34.5%
Pretty Much 52 11.2%
A great deal 10 2.1%
Total 466 100%
Missing 1
Total 467


2. To what extent do the preference laws accomplish the objective of helping a debtor deal with its creditors prior to a bankruptcy filing?

Frequency
Valid Percent
Valid Not at all 206 44.4%
A little 136 29.3%
Somewhat 91 19.6%
Pretty Much 22 4.7%
A great deal 9 1.9%
Total 464 100%
Missing 3
Total 467


3a. How often are distributions to unsecured creditors in bankruptcy cases increased as a result of recoveries in preference actions?

Frequency
Valid Percent
Valid Never 55 11.8%
Rarely 293 63.0%
Sometimes 102 21.9%
Frequently 15 3.2%
Always 0 0.0%
Total 465 100%
Missing 2
Total 467
b. If you circled 2 [Rarely], 3 [Sometimes], 4 [Frequently] or 5 [Always] in question 3a (above), to what extent are recoveries increased?
Frequency
Valid Percent
Valid Minimally 369 89.8%
Moderately 38 9.2%
A great deal 4 1.0%
Total 411 100%
Missing 56
Total 467


4. The proceeds of preference actions should be permitted to be distributed: a. to the debtor for operations or funding a reorganization plan.

Frequency
Valid Percent
Valid Definitely Not 291 64.8%
Probably Not 82 18.3%
Probably Yes 62 13.8%
Definitely Yes 14 3.1%
Total 449 100%
Missing 18
Total 467
b. to secured creditors (if authorized by court order).
Frequency
Valid Percent
Valid Definitely Not 164 36.4%
Probably Not 68 15.1%
Probably Yes 145 32.2%
Definitely Yes 74 16.4%
Total 451 100%
Missing 16
Total 467
c. to retained professionals for allowed fees and expenses.
Frequency
Valid Percent
Valid Definitely Not 272 61.0%
Probably Not 105 23.5%
Probably Yes 60 13.5%
Definitely Yes 9 2.0%
Total 446 100%
Missing 21
Total 467
d. only to creditors similarly situated to the creditor from which the recovery was received.
Frequency
Valid Percent
Valid Definitely Not 76 17.0%
Probably Not 98 22.0%
Probably Yes 135 30.3%
Definitely Yes 137 30.7%
Total 446 100%
Missing 21
Total 467
e. to creditors in order of the priority of their claims.
Frequency
Valid Percent
Valid Definitely Not 59 12.9%
Probably Not 75 16.4%
Probably Yes 190 41.7%
Definitely Yes 132 28.9%
Total 456 100%
Missing 11
Total 467
f. in any manner provided in the Chapter 11 plan.
Frequency
Valid Percent
Valid Definitely Not 162 36.2%
Probably Not 141 31.5%
Probably Yes 122 27.2%
Definitely Yes 23 5.1%
Total 448 100%
Missing 19
Total 467


5. Should the following entities be able to obtain a lien on preference actions or recoveries? a. A post-petition lender

Frequency
Valid Percent
Valid No 364 81.8%
Yes 81 18.2%
Total 445 100%
Missing 22
Total 467
b. A pre-petition creditor as part of its adequate protection
Frequency
Valid Percent
Valid No 119 26.2%
Yes 336 73.8%
Total 455 100%
Missing 12
Total 467
c. A post-confirmation lender
Frequency
Valid Percent
Valid No 370 83.7%
Yes 72 16.3%
Total 442 100%
Missing 25
Total 467


6. a. The period within which transfers to insider creditors should be recoverable as preferences is:

Frequency
Valid Percent
Valid 30 days before bankruptcy 45 9.7%
60 days before bankruptcy 20 4.3%
90 days before bankruptcy 65 14.1%
120 days before bankruptcy 18 3.9%
180 days before bankruptcy 46 10.1%
1 year before bankruptcy 196 42.4%
anytime after the debtor becomes insolvent 72 15.6%
Total 462 100%
Missing 5
Total 467
b. The period within which transfers to noninsider creditors should be recoverable as preferences is
Frequency
Valid Percent
Valid 30 days before bankruptcy 194 42.0%
60 days before bankruptcy 76 16.5%
90 days before bankruptcy 133 28.8%
120 days before bankruptcy 18 3.9%
180 days before bankruptcy 14 3.0%
1 year before bankruptcy 10 2.2%
anytime after the debtor becomes insolvent 17 3.7%
Total 462 100%
Missing 5
Total 467


7. The following question seeks your opinion as to the types of payments that should be repaid to a bankruptcy estate. For each of the following fact patterns, assume that (i) you are not the defendant in the preference action; (ii) if the amount paid to the creditor were repaid to the bankruptcy estate, payment to you would significantly increase; and (iii) the amount paid to the creditor allows it to receive a significantly higher percentage of its claim than other creditors. Each fact pattern also asks you to respond assuming first, that the creditor is an insider, and second, that the creditor is not an insider. Please indicate with respect to each of the following fact patterns whether a payment made to a creditor should be repaid to the bankruptcy estate. a. The creditor obtains payment within 90 days prior to a bankruptcy and after filing suit against the debtor, where (i) the creditor is an insider, and (ii) the creditor is not an insider.

CREDITOR IS AN INSIDER
CREDITOR IS NOT AN INSIDER
Frequency
Valid Percent
Frequency
Valid Percent
Valid Definitely Not 57 12.5% Definitely Not 145 31.7%
Probably Not 34 7.5% Probably Not 166 36.2%
Probably Yes 95 20.9% Probably Yes 100 21.8%
Definitely Yes 269 59.1% Definitely Yes 47 10.3%
Total 455 100% Total 458 100%
Missing 12 9
Total 467 467
b. The creditor obtains payment within 90 days prior to a bankruptcy and after threatening to file suit, where (i) the creditor is an insider, and (ii) the creditor is not an insider.
CREDITOR IS AN INSIDER
CREDITOR IS NOT AN INSIDER
Frequency
Valid Percent
Frequency
Valid Percent
Valid Definitely Not 49 10.9% Definitely Not 110 24.1%
Probably Not 32 7.1% Probably Not 175 38.3%
Probably Yes 89 19.7% Probably Yes 115 25.2%
Definitely Yes 281 62.3% Definitely Yes 57 12.5%
Total 451 100% Total 457 100%
Missing 16 10
Total 467 467
c. The creditor obtains payment within 90 days prior to a bankruptcy and after sending one or more written delinquency notices to the debtor, where (i) the creditor is an insider, and (ii) the creditor is not an insider.
CREDITOR IS AN INSIDER
CREDITOR IS NOT AN INSIDER
Frequency
Valid Percent
Frequency
Valid Percent
Valid Definitely Not 46 10.1% Definitely Not 114 24.9%
Probably Not 46 10.1% Probably Not 180 39.3%
Probably Yes 104 22.9% Probably Yes 114 24.9%
Definitely Yes 258 56.8% Definitely Yes 50 10.9%
Total 454 100% Total 458 100%
Missing 13 9
Total 467 467
d. The creditor obtains payment within 90 days prior to a bankruptcy and after making one or more phone calls to the debtor requesting payment, where (i) the creditor is an insider, and (ii) the creditor is not an insider.
CREDITOR IS AN INSIDER
CREDITOR IS NOT AN INSIDER
Frequency
Valid Percent
Frequency
Valid Percent
Valid Definitely Not 42 9.3% Definitely Not 107 23.5%
Probably Not 49 10.8% Probably Not 190 41.8%
Probably Yes 101 22.3% Probably Yes 104 22.9%
Definitely Yes 261 57.6% Definitely Yes 54 11.9%
Total 453 100% Total 455 100%
Missing 14 12
Total 467 467
e. The creditor obtains payment within 90 days prior to a bankruptcy, based on a request by the debtor to accept late payment, where (i) the creditor is an insider, and (ii) the creditor is not an insider.
CREDITOR IS AN INSIDER
CREDITOR IS NOT AN INSIDER
Frequency
Valid Percent
Frequency
Valid Percent
Valid Definitely Not 44 9.7% Definitely Not 128 28.0%
Probably Not 54 11.9% Probably Not 168 36.8%
Probably Yes 103 22.6% Probably Yes 111 24.3%
Definitely Yes 254 55.8% Definitely Yes 50 10.9%
Total 455 100% Total 457 100%
Missing 12 10
Total 467 467
f. Without any overt collection efforts by the creditor, the debtor makes payment to the creditor within 90 days prior to a bankruptcy, pursuant to an out-of-court restructuring that treats certain creditors better than others, where (i) the creditor is an insider, and (ii) the creditor is not an insider.
CREDITOR IS AN INSIDER
CREDITOR IS NOT AN INSIDER
Frequency
Valid Percent
Frequency
Valid Percent
Valid Definitely Not 47 10.3% Definitely Not 94 20.5%
Probably Not 40 8.8% Probably Not 121 26.4%
Probably Yes 86 18.9% Probably Yes 131 28.6%
Definitely Yes 283 62.1% Definitely Yes 112 24.5%
Total 456 100% Total 458 100%
Missing 11 9
Total 467 467
g. Without any overt collection efforts by the creditor, the debtor makes payment to the creditor within 90 days prior to a bankruptcy because the debtor desires to treat that creditor more favorably than other creditors, where (i) the creditor is an insider, and (ii) the creditor is not an insider.
CREDITOR IS AN INSIDER
CREDITOR IS NOT AN INSIDER
Frequency
Valid Percent
Frequency
Valid Percent
Valid Definitely Not 46 10.1% Definitely Not 70 15.4%
Probably Not 17 3.7% Probably Not 79 17.4%
Probably Yes 57 12.6% Probably Yes 116 25.5%
Definitely Yes 334 73.6% Definitely Yes 190 41.8%
Total 454 100% Total 455 100%
Missing 13 12
Total 467 467


8. Should the following transactions be considered the same as the payment of money for purposes of determining whether the transaction should be set aside as a preference? a. The debtor returns goods sold by the creditor.

Frequency
Valid Percent
Valid No 372 80.0%
Yes 93 20.0%
Total 465 100%
Missing 2
Total 467
b. The debtor transfers goods to the creditor not originally sold by that creditor.
Frequency
Valid Percent
Valid No 54 11.6%
Yes 411 88.4%
Total 465 100%
Missing 2
Total 476
c. The debtor grants the creditor a security interest in the debtor's assets.
Frequency
Valid Percent
Valid No 192 41.4%
Yes 272 58.6%
Total 464 100%
Missing 3
Total 467
d. The debtor grants the creditor a mortgage on the debtor's real estate.
Frequency
Valid Percent
Valid No 178 38.7%
Yes 282 61.3%
Total 460 100%
Missing 7
Total 467
e. The court imposes a lien after a judgment is obtained by the creditor.
Frequency
Valid Percent
Valid No 358 77.7%
Yes 103 22.3%
Total 461 100%
Missing 6
Total 467
f. The court imposes a lien upon initiation of a suit by the creditor and prior to judgment.
Frequency
Valid Percent
Valid No 228 49.2%
Yes 235 50.8%
Total 463 100%
Missing 4
Total 467


9. Should an increase in collateral that increases the amount recoverable by a secured creditor within a specified period prior to a bankruptcy be recoverable as a preference if: a. the debtor grants the secured creditor additional collateral to induce the secured creditor to lend additional money to the debtor?

Frequency
Valid Percent
Valid No 324 70.3%
Yes 137 29.7%
Total 461 100%
Missing 6
Total 467
b. the debtor grants the secured creditor additional collateral to induce the secured creditor to grant favorable concessions (e.g., reduction in interest rate, extension of maturity date, etc.) to the debtor?
Frequency
Valid Percent
Valid No 234 50.8%
Yes 227 49.2%
Total 461 100%
Missing 6
Total 467
c. the amount of the collateral increases as a result of additional goods sold on credit and unpaid for as of the date of the bankruptcy?
Frequency
Valid Percent
Valid No 277 60.1%
Yes 184 39.9%
Total 461 100%
Missing 6
Total 467


10a. The current preference law has eight defenses or exceptions. Should the preference law be revised to avoid or set aside all transfers by a debtor on account of antecedent debts within a specific period of time before the filing of a bankruptcy without regard to defenses?

Frequency
Valid Percent
Valid No opinion 79 17.1%
No 297 64.4%
Yes 85 18.4%
Total 461 100%
Missing 6
Total 467
b. If the current law were revised to avoid or set aside all transfers by a debtor within a specified period before the filing of a bankruptcy without regard to defenses, the avoidance period should be:
Frequency
Valid Percent
Valid one week or less 85 18.4%
30 days. 184 39.8%
60 days. 71 15.4%
90 days. 81 17.5%
more than 90 days 41 8.9%
Total 462 100%
Missing 5
Total 467


11. The date of transfer for purposes of determining whether a security interest is a preference should be:

Frequency
Valid Percent
Valid the date the security interest was granted, regardless of perfection date 80 17.3%
the date the security interest was granted only if perfected within 10 days 35 7.6%
the date the security interest was granted only if perfected within 20 days 30 6.5%
the date the security interest was granted only if perfected within 30 days 66 14.3%
the date the security interest was granted only if perfected before the bankruptcy filing 75 16.2%
the date the security interest was deemed perfected under state law 121 26.2%
Other 16 3.5%
No opinion 39 8.4%
Total 462 100%
Missing 5
Total 467


12. Do the preference laws penalize creditors who provide financial accommodations to or otherwise work with a debtor in attempting to resolve its financial problems?

Frequency
Valid Percent
Valid No opinion 40 8.6%
No 33 7.1%
Yes 391 84.3%
Total 464 100%
Missing 3
Total 467


13. Preference actions should only be brought where the amount in issue is:

Frequency
Valid Percent
Valid any amount, without a minimum 74 16.1%
greater than $600 8 1.7%
greater than $1,000 67 14.6%
greater than $5,000 107 23.3%
greater than $10,000 66 14.4%
greater than $25,000 82 17.9%
other 55 12.0%
Total 459 100%
Missing 8
Total 467


14. To what extent does the existence of preference laws affect your decision whether to insist on timely payments from a financially troubled debtor?

Frequency
Valid Percent
Valid No effect 136 29.2%
Some effect 179 38.5%
Major effect 150 32.3%
Total 465 100%
Missing 2
Total 467


15. The risk of having to repay an out-of-court settlement amount as a preference would:

Frequency
Valid Percent
Valid keep me from making a settlement 37 8.0%
be a factor militating against making a settlement 220 47.5%
have no effect on my decision to make a settlement 206 44.5%
Total 463 100%
Missing 4
Total 467


16. Where payment is made by check, the date of transfer, for purposes of determining whether the payment was made close enough to the bankruptcy to warrant its being set aside as a preference, should be: [Assume the check is not post-dated.]

Frequency
Valid Percent
Valid the date of the check 92 19.8%
the date of mailing of the check 59 12.7%
the date of receipt of the check 67 14.7%
the date the check is deposited in the creditor's bank account 161 34.7%
the date the check clears the debtor's bank account 82 17.7%
other 3 0.6%
Total 464 100%
Missing 3
Total 467


17. Would a law requiring the losing party in preference litigation to pay the counsel fees of the winning party be a benefit or detriment to the bankruptcy process?

Frequency
Valid Percent
Valid Be a benefit 158 34.2%
Be a detriment 197 42.6%
Make no difference 54 11.7%
No opinion 53 11.3%
Total 462 100%
Missing 5
Total 467


18. What one specific area of existing preference law most troubles you, and what should be done to resolve this issue? [Specify.]

[Responses not compiled.]
19. What is your profession?
Frequency
Valid Percent
Valid Credit manager 365 79.0%
Lender 51 11.0%
Other 46 10.0%
Total 462 100%
Missing 5
Total 461


20. Are you involved primarily with consumer or business credit?

Frequency
Valid Percent
Valid Consumer 4 0.9%
Business 447 96.3%
About evenly dividend 13 2.80%
Total 464 100%
Missing 3
Total 467


21. What are the typical credit terms extended by your company?

Frequency
Valid Percent
Valid 10 days or less 15 3.3%
11 to 29 days 35 7.6%
30 days 252 55.0%
31 to 60 days 55 12.0%
Greater than 60 days 27 5.9%
Monthly installment payments 7 1.5%
other 67 14.6%
Total 458 100%
Missing 9
Total 467


22. How many bankruptcy cases have you been involved in?

Frequency
Valid Percent
Valid None 7 1.5%
1 to 5 80 17.3%
6 to 10 70 15.1%
11 to 19 63 13.6%
20 or more 243 52.5%
Total 463 100%
Missing 4
Total 467


23. How many preference lawsuits or threats of preference lawsuits have you defended?

Frequency
Valid Percent
Valid None 105 23.0%
1 to 5 215 47.1%
6 to 10 69 15.1%
11 to 14 11 2.4%
15 or more 56 12.3%
Total 456 100%
Missing 11
Total 467


24. How many creditors' committees have you served on?

Frequency
Valid Percent
Valid None 136 29.9%
1 to 3 190 41.8%
4 to 6 66 14.5%
7 to 9 19 4.2%
10 or more 44 9.7%
Total 455 100%
Missing 12
Total 467

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