Improvement in Position Test

A calculation that determines whether a lender with a floating lien on inventory or accounts receivable has received a preference. The bankruptcy court compares the value of the lender’s collateral as of 90 days prior to the bankruptcy filing with the value of the same collateral on the bankruptcy filing date. If the net result is that the secured creditor’s position has not improved from the applicable period to the bankruptcy filing date, there is no preference.

Bankruptcy Code § 547(c)(5). See also Preference.

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