Bankruptcy: Lien Avoidance Case Review: Avoidance of a Judicial Lien as a Preference

In Babiker v. Citizens Contracting Co. the United States Bankruptcy Court at Alexandria, Virginia, avoided a creditor's judgment lien against two debtors as a preference because the creditor was unable to demonstrate that the debtors were solvent when the judgment lien was entered within ninety days of the filing of the bankruptcy petition. The Court cited Bankruptcy Code §547(b) as authority for finding that the docketing of a judgment lien constituted a transfer to or for the benefit of a creditor. This case serves as an excellent reminder as to why swift action in taking and docketing judgment is important - delay can put you in the ninety days preference window.