Preferential Creditors

Preferential creditors are individuals or entities that have a legal right to be paid before other creditors when a debtor goes bankrupt or is liquidated. This priority can include certain types of debts, like unpaid wages, taxes owed to the government, and some employee benefits. In the case of insolvency, these creditors are satisfied first from the remaining assets, ensuring they receive payment before other unsecured creditors, such as suppliers or customers, who may have to wait longer, or potentially not receive anything at all. This system protects key stakeholders in the workforce and government.