In a recent decision by the influential Third Circuit Court of Appeals, In re KB Toys Inc., 2013 U.S. App. LEXIS 23083 at *17 (3d Cir. Nov. 15, 2013), the Court decided that “the cloud on the claim” stemming from a preferential payment made to the original claimant continues with the claim, which then could be disallowed.

When a contractor pays money into court to discharge a lien of a sub-contractor, can that money only be used to discharge that lien holder’s claim?  Or is it available to pay the liens of all eventual lien holders?  In Canadian Western Bank v.