Secured creditor is a lender who legally enforceable claim on a borrower's assets. Lender usually claims assets of liquidation value equal to the loan amount. Secured creditor ca receive the proceeds of the foreclosure sale and in case of bankruptcy. He has to be satisfied before unsecured creditors.
Hierarchy of creditors in case of company insolvency puts secured creditor on the top. Usually it is a bank or other asset lender that holds charge over the asset. Unsecured creditors include: suppliers, contractors, etc.
- Citron, D., Wright, M., Ball, R., & Rippington, F. (2003).Secured creditor recovery rates from management buyouts in distress. European Financial Management, 9(2), 141-161.
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