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Wisconsin Statutes

Wis. Stat. § 128.07 (2026)

Preferred creditors

✓ current as of July 2026

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128.07128.07 Preferred creditors.

128.07(1)(1) Definitions. In this section:

128.07(1)(a)(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.

128.07(1)(b)(b) “Recipient” means a person who receives a preference, or benefits from a preference, or that person’s agent.

128.07(1)(c)(c)

128.07(1)(c)1.1. “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:

128.07(1)(c)1.a.a. The sale or other disposal of or parting with property, an interest in property or the possession of property.

128.07(1)(c)1.b.b. The fixing of a lien upon property or upon an interest in property.

128.07(1)(c)2.2. The retention of a security title to property delivered to a debtor shall be considered a transfer permitted by the debtor.

128.07(2)(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.

128.07(4)(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.

128.07 HistoryHistory: 1993 a. 492; 1997 a. 253.

128.07 AnnotationA 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.

128.07 AnnotationCircumstantial 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.

128.07 AnnotationWisconsin’s public policy favoring the equal distribution of assets when creditors cannot be fully paid—to the point of allowing a receiver to recover preferential payments under this section—embodies a public policy so important that parties may not avoid it. Therefore, in this case, the choice of law and forum selection provisions contained in contracts between an alleged insolvent debtor and a creditor were unenforceable when a Wisconsin receiver sought to recover preferential payments made to the creditor from the debtor as governed by this section. Dizard v. Torro LLC, 2025 WI App 31, 416 Wis. 2d 405, 21 N.W.3d 821, 23-2135.

128.07 AnnotationBecause the preference provisions of this section do not conflict with the federal bankruptcy code, they are not preempted by it. Ready Fixtures Co. v. Stevens Cabinets, 488 F. Supp. 2d 787 (2007).

Notes of Decisions

Cited in 11 cases (2 in the last 5 years), 1955–2025 · leading case: Daniel R. Freund v. Nasonville Dairy, Inc., 2019 WI App 55 (Wis. Ct. App. 2019).

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Daniel R. Freund v. Nasonville Dairy, Inc., 2019 WI App 55 (Wis. Ct. App. 2019). · cites it 27× “The circuit court granted judgment for Freund in an oral decision immediately following the arguments, but it did not offer a specific resolution of the parties’ dispute concerning the correct interpretation of § 128.07. It is undisputed that Liberty’s $290,000 indebtedness to…”

Ready Fixtures Co. v. Stevens Cabinets, 488 F. Supp. 2d 787 (W.D. Wis. 2007). · cites it 27× “This is a civil action arising under Wis. Stat. § 128.07 . Plaintiff Michael Polsky, receiver for Ready Fixtures Company, alleges that defendant Stevens Cabinets received a preferential transfer of money from Ready Fixtures after the company became insolvent.”

Dubis v. B.W. Supply (In Re Delta Grp.), 300 B.R. 918 (Bankr. E.D. Wis. 2003). · cites it 23× “For the reasons discussed below, the Court grants the Defendants’ motions to dismiss and holds that § 544(b) of the Code does not allow the Trustee to avail himself of the avoidance powers granted to receivers and assignees under Wis. Stat. § 128.07 . FACTS Based on the…”

Dubis v. B.W. Supply (In Re Delta Grp.), 336 B.R. 405 (E.D. Wis. 2004). · cites it 21× “ISSUE ON APPEAL The trustee framed the issue on appeal as follows: Did the Bankruptcy Court err in determining that the trustee cannot avail himself of the avoidance power set forth in Wis. Stat. § 128.07 (2) through 11 U.S.C.”

ADMANCO, Inc. ex rel. Polsky v. 700 Stanton Drive, LLC, 2010 WI 76 (Wis. 2010). · cites it 2× “128 proceeding was not filed until December 30, 2004, no argument can be made that the letters of credit constituted a preference under Wis. Stat. § 128.07 . Admanco is a division of EBSCO Industries, Inc.”

In Re Bossell, Van Vechten & Chapman, 139 N.W.2d 639 (Wis. 1966). · cites it 3× “However, we do not agree with the trial court that the filing of the chattel mortgage within four months of the assignment for the benefit of the creditors constituted a voidable preference under sec. 128.07, Stats. Ch. 128 was enacted in 1937 and in a large measure was copied…”

Seth E. Dizard v. Torro LLC (Wis. Ct. App. 2025). · cites it 41× “§ 128.07 (2023-24).1 The question on appeal is whether the public policy in Wisconsin of favoring the equal distribution of assets when creditors cannot be paid, which is “embedded in … § 128.”

Chrysler Corp. v. Adamatic, Inc., 208 N.W.2d 97 (Wis. 1973). “Under sec. 128.07, Stats., an insolvent creditor, which.”

Malloy v. Korf, 352 F. Supp. 569 (E.D. Wis. 1972). · cites it 2× “§ 128.07(2) the plaintiff could have avoided the preference as against the preferred creditor had it been given within four months of the filing of the receivership petition.”

In Re Wisconsin Builders Supply Co., 136 F. Supp. 439 (E.D. Wis. 1955). · cites it 8× “Section 128.07(1) defines a preference, and Section 128.”

Dizard v. EIN CAP Inc (E.D. Wis. 2024). · cites it 12× “Dizard asserts that EIN is required under Wis. Stat. § 128.07 (2) to return the transfers for proportional distribution to Ridgeway’s remaining creditors.”

— Wis. Stat. § 128.07(1) — 1 case

In Re Wisconsin Builders Supply Co., 136 F. Supp. 439 (E.D. Wis. 1955). “Section 128.07(1) defines a preference, and Section 128.”

— Wis. Stat. § 128.07(1)(a) — 2 cases

Daniel R. Freund v. Nasonville Dairy, Inc., 2019 WI App 55 (Wis. Ct. App. 2019). “The circuit court granted judgment for Freund in an oral decision immediately following the arguments, but it did not offer a specific resolution of the parties’ dispute concerning the correct interpretation of § 128.07. It is undisputed that Liberty’s $290,000 indebtedness to…”

Seth E. Dizard v. Torro LLC (Wis. Ct. App. 2025). “§ 128.07 (2023-24).1 The question on appeal is whether the public policy in Wisconsin of favoring the equal distribution of assets when creditors cannot be paid, which is “embedded in … § 128.”

— Wis. Stat. § 128.07(2) — 5 cases

Daniel R. Freund v. Nasonville Dairy, Inc., 2019 WI App 55 (Wis. Ct. App. 2019). “The circuit court granted judgment for Freund in an oral decision immediately following the arguments, but it did not offer a specific resolution of the parties’ dispute concerning the correct interpretation of § 128.07. It is undisputed that Liberty’s $290,000 indebtedness to…”

Dubis v. B.W. Supply (In Re Delta Grp.), 300 B.R. 918 (Bankr. E.D. Wis. 2003). “For the reasons discussed below, the Court grants the Defendants’ motions to dismiss and holds that § 544(b) of the Code does not allow the Trustee to avail himself of the avoidance powers granted to receivers and assignees under Wis. Stat. § 128.07 . FACTS Based on the…”

Malloy v. Korf, 352 F. Supp. 569 (E.D. Wis. 1972). “§ 128.07(2) the plaintiff could have avoided the preference as against the preferred creditor had it been given within four months of the filing of the receivership petition.”

Dubis v. B.W. Supply (In Re Delta Grp.), 336 B.R. 405 (E.D. Wis. 2004). “ISSUE ON APPEAL The trustee framed the issue on appeal as follows: Did the Bankruptcy Court err in determining that the trustee cannot avail himself of the avoidance power set forth in Wis. Stat. § 128.07 (2) through 11 U.S.C.”

In Re Wisconsin Builders Supply Co., 136 F. Supp. 439 (E.D. Wis. 1955). “Section 128.07(1) defines a preference, and Section 128.”

— Wis. Stat. § 128.07(c)(1) — 1 case

Dubis v. B.W. Supply (In Re Delta Grp.), 300 B.R. 918 (Bankr. E.D. Wis. 2003). “For the reasons discussed below, the Court grants the Defendants’ motions to dismiss and holds that § 544(b) of the Code does not allow the Trustee to avail himself of the avoidance powers granted to receivers and assignees under Wis. Stat. § 128.07 . FACTS Based on the…”

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