Section 1034 Of Article 14. Proceedings In Cases Of Insolvency And Delinquency From California Insurance Code >> Division 1. >> Part 2. >> Chapter 1. >> Article 14.
1034
. (a) A preference is a transfer of any of the property of the
person proceeded against to or for the benefit of a creditor, for or
on account of an antecedent debt, made or suffered by the person
proceeded against within one year before the filing of a petition for
liquidation pursuant to Section 1016, the effect of which transfer
may be to enable the creditor to obtain a greater percentage of this
debt than another creditor of the same class would receive. The
following transactions shall be among those that may be considered a
preference:
(1) A transfer of property of the person proceeded against.
(2) The creation of a lien on the property of the person proceeded
against.
(3) The entry of a judgment against the person proceeded against.
(4) The transfers or other payments by the person proceeded
against pursuant to subdivision (f) of Section 10506 in support of
guarantees contemplated by Section 10506.4.
(b) If a liquidation order is entered pursuant to Section 1016
while the person proceeded against is already subject to a
conservation order, then the transfers described in subdivision (a)
shall be deemed preferences if made or suffered within one year
before the filing of the successful petition for conservation, or
within two years before the filing of the successful petition for
liquidation, whichever time is shorter.
(c) Any preference may be avoided by the liquidator if any of the
following is applicable:
(1) The transfer was made within four months before the filing of
the petition.
(2) The creditor receiving the transfer or to be benefited thereby
or his or her agent acting with reference thereto had, at the time
when the transfer was made, reasonable cause to believe that the
person proceeded against was insolvent or was about to become
insolvent.
(3) The creditor receiving the transfer was an officer, or any
employee or attorney or other person who was in fact in a position of
comparable influence in the person proceeded against to an officer,
whether or not the person held that position, or any shareholder
holding directly or indirectly more than 5 percent of any class of
any equity security issued by the person proceeded against, or any
other person, firm, corporation, association, or aggregation of
persons with whom the person proceeded against did not deal at arm's
length.
(d) Where the preference is voidable, the liquidator may recover
the property or, if it has been converted, its value from any person
who has received or converted the property; except where a bona fide
purchaser or lienor has given less than fair equivalent value, the
purchaser or lienor shall have a lien upon the property to the extent
of the consideration actually given. Where a preference by way of
lien or security title is voidable, the court may on due notice order
the lien or title to be preserved for the benefit of the estate, in
which event the lien or title shall pass to the liquidator.