2023 Wisconsin Statutes & Annotations › Chapter 128 - Creditors' actions. › 128.07 - Preferred creditors.

128.07
Preferred creditors.
(1)
Definitions. In this section:
(a)
A person shall be considered to have given a preference if, being insolvent, the person has made a transfer of any of his or her property, or has procured or permitted a judgment to be entered against him or her in favor of any other person, and the effect of the transfer or the enforcement of the judgment will be to enable any creditor to obtain a greater percentage of his or her debt than any other creditor of the same class.
(b)
“Recipient" means a person who receives a preference, or benefits from a preference, or that person's agent.
(c)
1.
“Transfer" means any of the following, whether made absolutely or conditionally, voluntarily or involuntarily, by or without judicial proceedings, as a conveyance, sale, assignment, payment, pledge, mortgage, lien, encumbrance, gift, security or otherwise:
a.
The sale or other disposal of or parting with property, an interest in property or the possession of property.
b.
The fixing of a lien upon property or upon an interest in property.
2.
The retention of a security title to property delivered to a debtor shall be considered a transfer permitted by the debtor.
(2)
If the debtor has given a preference within 4 months before the filing of a petition, or an assignment, after the filing of the petition and before the appointment of a receiver, or after the filing of an assignment and before the qualification of the assignee, and the recipient has reasonable cause to believe that the enforcement of the judgment or transfer would effect a preference, the judgment shall be voidable by the receiver or assignee, and the receiver or assignee may recover the property or its value from the recipient.
(4)
A transfer of property other than real property shall be considered to have been made or permitted at the time when it became so far perfected that no subsequent lien upon the property obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee. A transfer of real property shall be considered to have been made or permitted when it became so far perfected that no subsequent bona fide purchase from the debtor could create rights in the property superior to the rights of the transferee. If any transfer of real property is not so perfected against a bona fide purchase, or if any transfer of other property is not so perfected against such liens by legal or equitable proceedings prior to the filing of a petition initiating a proceeding in insolvency, it shall be considered to have been made immediately before the filing of the petition.
History:  1993 a. 492; 1997 a. 253.
A preference is voidable under sub. (2) if an ordinarily prudent business person would, under the circumstances, have reasonable cause to believe both that the transferor is insolvent and that the effect of the transfer would be to enable the recipient to obtain a greater percentage of its debt than any other creditor of the same class. Freund v. Nasonville Dairy, Inc., 2019 WI App 55, 389 Wis. 2d 35, 934 N.W.2d 913, 18-1215.
Circumstantial factors may support a finding under sub. (2) that a creditor had reasonable cause to believe a transfer would effect a preference. Facts relevant to such a determination can include: 1) the relation of the parties; 2) their intimacy or lack of it; 3) the usual or unusual nature of the transfer; 4) the opportunities of the creditor for knowledge; 5) the participation of the creditor, if any, in the debtor's business; and 6) the credibility and forthrightness of the witnesses as to the disclosure of relevant facts within their knowledge. Freund v. Nasonville Dairy, Inc., 2019 WI App 55, 389 Wis. 2d 35, 934 N.W.2d 913, 18-1215.
Because the preference provisions of this section do not conflict with the bankruptcy code, they are not preempted by it. Ready Fixtures Co. v. Stevens Cabinets, 488 F. Supp. 2d 787 (2007).