Surrender of Preference Law and Legal Definition

Surrender of preference refers to the yielding by the creditor of a bankrupt to the trustee in bankruptcy of a conveyance, assignment, lien, transfer, or encumbrance, which is void or voidable under the Bankruptcy Act, as a condition of the allowance of the claim of such creditor.

The Bankruptcy Act confers summary jurisdiction on a court of bankruptcy to compel a creditor who has filed a claim in the bankruptcy proceedings to surrender voidable preferences, whether or not the preferences relate to the same transaction as his claim. [Katchen v. Landy, 382 U.S. 323 (U.S. 1966)].