Buried in the list of proposed changes for the Small Business Reorganization Act (" SBRA"), most of which amend chapter 11 of the Bankruptcy Code (the" Code"), are two provisions targeting more general provisions of the Code. The first provision amends the language of section 547 (b), which authorizes a trustee to avoid preferential transfers.'The second provision amends section 1409 of title 28, which prescribes the" venue of certain proceedings." 2 Many presume that these certain proceedings include actions to avoid preferential transfers, commonly referred to as preference actions. 3

These two amendments are conspicuous in the SBRA as they are not clearly linked with small business reorganization cases. Preference actions certainly arise in small business reorganizations, but they also occur in every reorganization, and more broadly, in every chapter of the Code. Indeed, section 547 is one of the most frequently used provisions in the Code, arising in the context of liquidations just as often, if not more, than they do in reorganizations. 4 However, preference actions are particularly noteworthy in small business reorganizations because of the effect they can have on both debtors and creditors. Preference law is highly controversial and, for preference defendants, extremely counter-intuitive. 5 It is unclear whether preference actions fulfill the goals set out by Congress, 6 and preliminary data suggests these actions may be inefficient, at least when pursued in business cases. 7 Amendments to the law of preference avoidance are long overdue, and those provided by the SBRA, while a step in the right direction, do not go nearly far enough. This Article will explain why sections 547 and 1409 are of particular interest to small businesses and also why the amendments proposed in the SBRA are unlikely to promote the change they were intended to inspire. Part I will briefly explain how preference actions function in bankruptcy proceedings. Part II will then explore how preferences can be used in the business bankruptcy context, and in particular, the effect that preference actions can have on small businesses, both those who bring an