Question Andrew Law

The difference between UK and US preference law

What are some of the basic differences between UK and US preference law?

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Answer Internal Staff

UK preference law dates back to the Statute of 13 Elizabeth 1571(The Fraudulent Conveyances Act 1571), where property transfers by a Debtor that had the intent to defraud or hinder a Creditor was outlawed. The first US bankruptcy law was the Bankruptcy Act 1800. In the past, US preference law followed UK principles, however, this has changed as it does not now place importance on the mental state of the Debtor (Finch, 2002). Preference law in the UK and US have similar origins, however their approaches differ. UK law has adopted a stricter approach in terms of its vulnerability period of 6 months. In contrast, the US has adopted a period of 90 days. UK preference law is weaker in regards to the Debtor’s mental state, a prerequisite that is completely non-existent in US preference law, which focuses on effect. However, US preference law has a weakness in its exceptions and defences such as, for instance, the ordinary course of business and other ‘fall-back defences that can be relied on by Creditors. There are some concerns that US preference law exceptions are too generous and that rather than serving as a filter they act as incentives (McCormack, 2013).


Finch V,. (2002). Corporate Insolvency Law: Perspectives and Principles. Cambridge: Cambridge University Press

McCormack G,. (2013). Conflicts, avoidance and international insolvency 20 years on: a triple cocktail, JBL, 2, 141-159