What do the different types of creditor ranking mean?
Secured Creditors These creditors hold some form of security for any debts outstanding from the Company, which has been appropriately registered. This security is often in the form of a fixed charge over specific assets of the Company. Preferential Creditors These are in schedule 6 of the Insolvency Act 1986 (As amended) and include such creditors as pension schemes and employees. All such claims are subject to statutory limits, which are amended from time to time. Floating Charge Holders These creditors hold security over assets of the Company, which are not generally able to be identified specifically or represent the working capital of the Company. The charge crystallises under certain conditions of which appointment of Administrators is usually one. Unsecured Creditors All other creditors rank as unsecured creditors and rank “pari passu” (equally) with each other in their claims for Company assets. Secured creditors have the first claim on assets over which they have security. Any
