BANKRUPTCY-THE NEW TEST OF PERFECTION UNDER SECTION 60A-EFFECT OF PUBLIC LAW 461

A preference given to a creditor by an insolvent debtor is not a fraud on his other creditors, regardless of the fact that such payment reduces the share that they would be able to obtain upon an orderly liquidation and pro rata distribution of his estate. This simple principle has caused great confusion and trouble in the development of collective procedures for the satisfaction of the claims of creditors. It led through various channels to a very sweeping definition of preferences and provision for their avoidance in the Chandler Act of 1938, and has now produced, by a process of reaction from that step, the enactment of Public Law 461, amending sections 60a and 70c of the Bankruptcy Act.