In the 1924 case May, as Trustee in Bankruptcy of Geo. W. Cowen Co., Inc., Bankrupt v. Henderson et al., the Supreme Court ruled on a dispute regarding bankruptcy law and its application to stock transfers made by an insolvent company prior to declaring bankruptcy. The bankrupt firm had transferred shares of its own stock to certain creditors before filing for bankruptcy, which was challenged by other creditors who argued that these transactions were fraudulent under Section 67e of the Federal Bankruptcy Act because they occurred within four months preceding the filing for bankruptcy and while insolvent. The court held that such transfers could not be deemed fraudulent merely based on their timing or insolvency at time of transfer if there was no actual intent to defraud other creditors involved. It further clarified that shares owned by a corporation in itself have no value until distributed among shareholders upon dissolution; hence, transferring them does not diminish any asset value available for distribution among general creditors during liquidation proceedings post-bankruptcy declaration.

In the dissenting opinion for May v. Henderson, Justice McReynolds disagreed with the majority's decision to allow a trustee in bankruptcy to recover payments made by an insolvent debtor prior to declaring bankruptcy. He argued that these payments were not fraudulent and should not be considered as such simply because they were made while the company was insolvent. According to him, there was no evidence of intent to defraud on part of either party involved in these transactions. Furthermore, he contended that allowing trustees in bankruptcy cases like this one would discourage creditors from accepting payment from struggling businesses out of fear it could later be reclaimed if insolvency is declared - potentially exacerbating financial difficulties for those businesses trying hard to avoid bankruptcy.