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What are avoiding powers?

Avoiding powers are powers of a Chapter 11 debtor or trustee to avoid, or undo, transactions within certain time periods before the filing of the bankruptcy case. By canceling, or “disgorging,” the transfer, the debtor returns the assets otherwise earmarked for that creditor to the general estate to be divided among the various creditors. The purpose of avoiding powers is to prevent a situation in which one creditor gets an unfairly large share of the bankruptcy estate as compared to other creditors.

Barry Rosenzweig
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Barry Rosenzweig, has 25 years experience as an attorney helping clients solve their legal problems.