3 ms·

How?

• HWR_14 4y ago
  Bankruptcy law allows for the clawback of preferential transfers. Any transfers within 90 days of bankruptcy are assumed to be preferential. Or transfers for a longer time to insiders. And that's without fraud. With fraud they can go back farther. Like, Madoff's investors who got out in time had to turn over a lot of cash.
  • dcow 4y ago
    But this is nothing like the Madoff situation. So you're saying if I withdraw my rightful funds 80 days before a company goes bankrupt, and I use those funds to pay for consumable goods, and consume those goods, that those funds can be clawed back and I am now in debt? That doesn't sound right at all. I also just looked and a preferential transfer would be when the company that goes bankrupt deliberately pays off some debs but not others, hence giving some creditors preference. The notion does not seem to extend to individuals otherwise regularly conducting business with the company. That can't be resolved the way you suggested. Customers who ran FTX will not be required to return their funds so that someone can distribute some of their money to FTX's creditors, or even so that things can be "fairly" distributed across all customers...
    • HWR_14 4y ago
      Not only can it happen like that, it can happen like that even if there is no fraud. Paying off some customers you owe money to would be giving those creditors preference, I don't see how else you could interpret it. Heck, FTX went out of its way to only allow Bahamian citizens to withdraw money at the end, imagining that would be the jury pool deciding their fate soon.
      • deleted 4y ago
        [deleted]
      • dcow 4y ago
        I don't believe it would even be possible to "claw back" consumed goods, is my point. If you can link to some examples of ordinary people getting money clawed back because they withdrew it form a financial institution prior to bankruptcy, please do, because I simply don't understand how that's possible. The money is gone.