Understanding Different Types of Creditors #
Secured Creditors #
Secured creditors hold some form of security over the debtor’s assets. This could be:
- A fixed charge over specific assets
- A floating charge over changing assets
- Personal guarantees from company directors
Secured creditors typically have priority over other creditors when it comes to recovering debts.
Unsecured Creditors #
Most business creditors fall into this category. As an unsecured creditor:
- You have no security over the debtor’s assets
- You rank below secured creditors in insolvency
- You still have significant legal rights and options
Preferential Creditors #
Some creditors have preferential status, including:
- Employees (for certain wage claims)
- The Redundancy Payments Service
- Certain pension scheme contributions
Trade Creditors #
As a supplier of goods or services:
- You typically fall into the unsecured category
- You may have retention of title clauses
- You might have continuing business relationships to consider
Crown Creditors #
Government bodies like HMRC have special status:
- Previously held preferential status (changed in Enterprise Act 2002)
- Still have significant enforcement powers
- Can issue specific types of demands
Understanding Your Position #
To determine your creditor type, consider:
- Do you hold any security?
- What does your contract or trading terms say?
- Are you owed money for goods or services?
- Do you have any special status under law?