KRS 355.4-216: Insolvency and preference.

(1) If an item is in or comes into the possession of a payor or collecting bank that

suspends payment and the item has not been finally paid, the item must be returned

by the receiver, trustee, or agent in charge of the closed bank to the presenting bank

or the closed bank's customer.

(2) If a payor bank finally pays an item and suspends payments without making a

settlement for the item with its customer or the presenting bank which settlement is

or becomes final, the owner of the item has a preferred claim aga inst the payor

bank.

(3) If a payor bank gives or a collecting bank gives or receives a provisional settlement

for an item and thereafter suspends payments, the suspension does not prevent or

interfere with the settlement's becoming final if the finality o ccurs automatically

upon the lapse of certain time or the happening of certain events.

(4) If a collecting bank receives from subsequent parties settlement for an item which

settlement is or becomes final and the bank suspends payments without making a

settlement for the item with its customer which settlement is or becomes final, the

owner of the item has a preferred claim against the collecting bank.