Unsecured creditor

Insolvency

Insolvency processes
Administration Bankruptcy Chapter 7 (US) CVA Conservatorship Examinership IVA Liquidation Provisional liquidation Receivership
Officials
Insolvency practitioner Liquidator Referee in Bankruptcy Trustee in bankruptcy
Claimants
Creditor Preferential creditor Secured creditor Unsecured creditor
Restructuring
Chapter 11 (US) Cram down Restructuring Scheme of arrangement
Avoidance regimes
Fraudulent conveyance Undervalue transaction Unfair preference Voidable floating charge
Offences
Fraudulent trading Misfeasance Trading while insolvent Wrongful trading
Security
Floating charge Lien Mortgage Second lien loan Security interest
International
Chapter 15 (US) Cross-border insolvency EC Insolvency Regulation UNCITRAL Model Law
By country
Australia BVI Canada Cayman China Hong Kong Ireland Russia Switzerland UK USA
Other
Anti-deprivation rule Bankruptcy alternatives Creditor's rights Debtor Default Financial distress History of bankruptcy law Pari passu Pre-packaged insolvency Sovereign default Subordination

An unsecured creditor is a creditor other than a preferential creditor that does not have the benefit of any security interests in the assets of the debtor.^[1]

In the event of the bankruptcy of the debtor, the unsecured creditors usually obtain a pari passu distribution out of the assets of the insolvent company on a liquidation in accordance with the size of their debt after the secured creditors have enforced their security and the preferential creditors have exhausted their claims.

Although in a liquidation the unsecured creditors will usually realize the smallest proportion of their claims, in some legal systems, unsecured creditors who are also indebted to the insolvent debtor can (and in some jurisdictions, must) set off the debts, actually putting the unsecured creditor with a matured liability to the debtor in a pre-preferential position.

Footnotes

^ "Definition: unsecured creditor". Investopedia. Retrieved 29 June 2015.

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Unsecured creditor