Troutman Pepper's Creditor’s Rights Toolkit is a series that provides practical insights to help creditors confront the challenges of commercial bankruptcy.

When a company declares bankruptcy, parties that did business with the troubled company often face unpaid debts and minimal prospects for payment. These creditors may also face what is typically considered a frustrating process – being sued in a preference action to recover pre-bankruptcy payments.

This article briefly explains what a preference action is and some common defenses your business may have if sued.