class of creditors

A class of creditors refers to a group of lenders or suppliers who have similar rights and priorities when a company faces financial difficulty or bankruptcy. Creditors are grouped into classes based on the nature of their claims and legal rights. For example, secured creditors with specific collateral may be in a different class from unsecured creditors who do not have collateral. The order in which these classes are paid depends on legal rules, ensuring that some creditors have priority over others. Understanding these classes helps clarify how the company's remaining assets are distributed among its creditors.