In the case of Taylor v. Sternberg, Trustee in Bankruptcy (1934), the United States Supreme Court was tasked with determining whether a bankruptcy trustee could recover payments made by an insolvent debtor to its creditors within four months prior to filing for bankruptcy. The debtor had paid off some of his debts during this period but not all, leading to claims that these payments were preferential and should be returned to the estate for equal distribution among all creditors. The court ruled in favor of Sternberg, stating that under Section 60b of the Bankruptcy Act any payment made while insolvent within four months before filing can be recovered if it allows any creditor to receive more than they would have in a liquidation scenario under Chapter VII. This decision reinforced the principle that all unsecured creditors should share equally in their debtor's assets.

In the dissenting opinion for Taylor v. Sternberg, it was argued that the majority's decision to allow a trustee in bankruptcy to recover payments made by an insolvent debtor prior to declaring bankruptcy was incorrect. The dissenting justices believed this ruling contradicted previous case law and unfairly penalized creditors who had no knowledge of their debtor's insolvency at the time they received payment. They contended that such transactions should not be considered fraudulent simply because they occurred within four months of the declaration of bankruptcy, as stipulated by Section 60b of the Bankruptcy Act. Instead, these justices felt that evidence demonstrating actual intent to defraud on part of either party involved should be required before deeming such transactions voidable.