Preferred Creditors

Preferred creditors are individuals or organizations that have a higher priority in getting repaid during bankruptcy or liquidation proceedings. In such cases, certain debts, like taxes or employee wages, are considered preferred, meaning these creditors are paid before others, such as unsecured creditors. This status arises because the law recognizes the importance of these claims for social or economic reasons. As a result, preferred creditors typically have a better chance of receiving at least some of the money owed to them compared to those lower in the repayment hierarchy.