Definition of Preferred creditor:
A secured lender or person who is entitled to repay (by law or agreement) to another lender in the event of liquidation of the lender's assets.
In the case of bankruptcy, the preferential type of lender is established by law mostly in jurisdiction and usually involves the holders of preferential securities and sometimes the tax authorities. A preferred lender could also be an economic development agency, such as the World Bank, which is primarily repaid on loans given to a country during an economic crisis.
The preferred lender is a person or organization that takes precedence over accepting the amount owed if the debtor declares bankruptcy. Because bankrupt companies do not have enough money to cover all their financial obligations, some investors who owe this money receive a share or nothing at all. The preferential lender has the first right to all funds available from the debtor. The preferred lender is also known as the preferred lender.
Meaning of Preferred creditor & Preferred creditor Definition