The Problem of Disputing Preferential Transfers in Bankruptcy (Insolvency) Proceedings

Effective means of protecting the property interests of creditors against dishonest actions of the debtor's concealment of property is disputing preferential transfers. The consolidation of the rules on challenging transactions of the debtor and their subsequent implementation are inextricably linked with the need to reach compromise in the security interests of the registered creditors and creditors or other persons in respect of whom committed the impugned transaction (hereinafter – the counterparties). The author’s goal is to identify and (or) the to formulate conditions for achievement a balance of interests between registered creditors and counterparties in the framework of disputing preferential transfers and to evaluate the current legal regulation of disputing preferential transfers and legal practice to ensure appropriate balance. The study has shown that the following conditions should be simultaneously observed to create and maintain balance of interests between registered creditors and counterparties: the absence of benefits on the side of some entities to the detriment of others; mandatory consideration of the good faith or bad faith actions of a counterparty. Mentioned conditions have allowed analyzing the current legal regulation of disputing preferential transfers and legal practice, evaluating them to ensure balance of interests between registered creditors and counterparties, and to identify the most problem situations, leading to imbalance of these interests. The result of this analysis is the confirmation of the hypotheses that the current legal regulation of disputing preferential transfers in bankruptcy proceedings and law enforcement practices do not provide balance of interests considered, and lead to excessive protection of the interests of some actors to the detriment of others, and this necessitates further improvement of the legislation on insolvency in the listed work areas.