What is a preferred creditor?

The preferred creditor is a legal person with a priority right to collection due to the suspension of payments or bankruptcy of the debtor derived from its institutional nature, or because it has some type of guarantee. It is the one with the highest collection rights. Having the preferred label or category is very important to the lender. However, this is so if the debtor lacks the necessary instruments to pay all of his creditors. Also, we must bear in mind that all lenders are on an equal footing. All this is registered in a civil law known as Conditio Creditorum. The problem can arise, as we have said before, when the debtor does not have the necessary resources to pay off his debt. In this way, the debtor does not meet his financial obligations and may have serious problems.

Characteristics of the preferred creditor

The preferred creditor has some notable characteristics such as:

  • Priority: the preferred creditor will have priority before others lenders of the same debtor at the time of collecting the debt.
  • Legality: the condition of preferred creditor is stipulated in the legal framework. It establishes, for example, the conditions under which the assets must be distributed among the different shareholders, but only in the case of bankruptcy Of a company.
  • Protection: the purpose of giving priority to a creditor implies a certain lack of protection. For example, in the case of a bankrupt company that owes employees wages, they will take precedence over creditors.

And on the other hand, you have to know how to choose the preferred creditor. The criteria that are usually followed for this choice are: the guarantee, that is, if the creditor has rights to a seizable asset of the debtor, and the other is legality, where the law establishes priority in the order of payment to creditors .

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