A preference is anything which puts one of the insolvent company’s creditors (or someone who has guaranteed your debts) in a better position than they would otherwise have been had that thing not been done. For example, repaying one creditor ahead of others, or granting new security for a debt.
Preferences can be ‘set aside’ if your company is liquidated (or you become personally bankrupt) within set time limits. The court can require a creditor who has been repaid in preference to others to return the money.
In practice, attempting to create preferences can also encourage other creditors to press for liquidation or bankruptcy to protect their interests.
Causing a company to prefer one creditor over another would also be a breach of the directors’ duties and they could, in an extreme situation, be made personally liable to repay the monies to the company in liquidation.