Antecedent Debt (Financial Restructuring & Bankruptcy Glossary)

Summary

In the context of a preference, a debt or liability on a claim is pre-existing, or antecedent, if the debt is incurred prior to an alleged preferential transfer. The debtor’s legal obligation to pay the claim must come first, regardless of whether the claim is liquidated, disputed, secured, or unsecured. Examples of antecedent debt could include a retention or other bonus paid to a former officer of the debtor; a deed of trust given to a creditor to secure preexisting debt; and a late-perfected interest on a loan made to the debtor.