In the case of Kelley, Trustee of The Gibraltar Investment and Home Building Company, Bankrupt v. Gill in 1917, the United States Supreme Court was asked to determine whether a trustee in bankruptcy could recover property transferred by the bankrupt party prior to declaring bankruptcy. In this case, The Gibraltar Investment and Home Building Company had transferred property to Gill before filing for bankruptcy. After being appointed as trustee for the company's estate following its declaration of bankruptcy, Kelley sought to reclaim that property on behalf of all creditors under section 67e (now repealed) of the Bankruptcy Act which allows trustees to set aside fraudulent transfers made within four months prior to filing for bankruptcy if they were made with intent or reasonable cause to believe that it would hinder or delay creditors' claims. However, Gill argued he received these properties without knowledge about any fraudulence involved from Gibraltar’s side while purchasing them at fair value thus making him an innocent purchaser protected under state laws against such recovery actions by trustees in federal courts. Ultimately though after considering both arguments presented before it including other relevant legal provisions applicable here too like sections 60b & 70e etc., Supreme Court ruled favorably towards Kelly allowing him thereby successfully recovering those disputed assets back into debtor’s insolvent estate again.

In the dissenting opinion for Kelley v. Gill, it was argued that the majority's decision failed to properly interpret and apply bankruptcy law. The dissent took issue with the majority's conclusion that a creditor who had received preferential payments from a debtor prior to their declaration of bankruptcy could not be required to return those funds so they could be distributed among all creditors. The dissenting justices believed this interpretation contradicted established principles of equity and fairness in bankruptcy proceedings, which aim at ensuring an equal distribution of assets among all creditors rather than allowing some to benefit disproportionately due to timing or favoritism by the debtor. They also expressed concern about potential abuse if debtors were allowed to make preferential payments without any possibility of recovery by trustees on behalf of other creditors.