Priority Creditor
A creditor whose claim is given preferential ranking in an insolvency, ahead of ordinary unsecured creditors when funds are distributed.
Ranking ahead of others
A priority creditor is one whose claim is given a preferred ranking in the order of distribution in an insolvency, so it is paid ahead of ordinary unsecured creditors out of available funds. Certain categories of claim, such as some employee entitlements, are commonly treated as priority claims. The detailed order of priority is set by law and applied by the external practitioner.
Why it matters
The existence of priority claims affects how much is left for ordinary unsecured creditors, who rank behind them. Understanding where a claim sits in the order helps set realistic expectations about recovery. This is general information only and not legal advice. The general unsecured position is explained at unsecured creditor.
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