Insider Preferences?

[question1011]

I understand in business bankruptcies that payments to insiders w/i 12 months of bankruptcy are considered preferences and can be reversible in bankruptcy.

Does this apply to payments to the CEO for:

1. Normal salary; and
2. Reimbursement of normal operating and travel expenses incurred and paid by the CEO with personal credit card promptly after receiving such bills?

 

[JETX]

Generally no. These are considered salary and expenses. The law generally provides for 'unusual' payments that are made by the corporation prior to bankruptcy. Payments like performance bonuses and the like. Not normal compensation.

 

[question1011]

I was a little more concerned about the expenses

not really the salary...but the expense were normal and customery and regualr expenses?

I guess the question from another outside creditor's perspective is why did those expenses get paid and not his/her expenses?

Why some and not others?

I guess that's just the way it is?