Generally, any transfer made by a debtor within 90 days before bankruptcy is considered preferential and may be recoverable by the estate. When a transfer is received by an insider, however, Section 547(b)(4)(B) of the Bankruptcy Code lengthens that time period to a full year. Based on this extended reach-back period, it is not uncommon for debtors and trustees to argue that a particular defendant qualifies as an insider, especially when the difference between 90 days and one year could yield a potentially large recovery for the estate.
Section 101(31) of the Bankruptcy Code defines an "insider" of a corporation as a director of the debtor; officer of the debtor; person in control of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or relative of a general partner, director, officer or person in control of the debtor. Courts regularly treat this definition as illustrative of the types of possible insider relationships, rather than an exhaustive list. Accordingly, determining who qualifies as an insider is not always a simple question and will frequently depend upon the facts of each case.
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