General Creditor

One who is owed an uncollateralized debt. A general creditor has no lien or collateral on the debt except perhaps a claim on unpaid-for goods, depending on the nature of the goods. In the event of bankruptcy in the United States, a general creditor has no automatic right to any part of the debtor's property, and must file a proof of claim in bankruptcy court. In a no-asset Chapter 7 bankruptcy, most debts are discharged to the detriment of the general creditor. In an asset Chapter 7 case, unsecured property is liquidated and distributed to general and other creditors according to the bankruptcy court's ruling. See also: Secured creditor.

general creditor

A lender with an uncollateralized loan, such as the owner of a debenture. In the event that a borrower goes bankrupt, its general creditors are likely to recover a smaller proportion of what is owed them than secured creditors will.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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References in periodicals archive

General creditors are entitled to be paid in full before equityholders receive anything.

Bankruptcy's Quiet Revolution

Then the FDIC could go ahead and agree that it would protect all general creditors of banks in bank failures.

Former FDIC chairman William M. Isaac

In the end, creditors serving on creditors' committees should not feel that they are sacrificing their own positions by fulfilling their fiduciary obligations, although there may be times that a creditor's interests are so at odds with the general creditor body that it makes it difficult or impossible for it to separate its fiduciary obligations from its personal needs.

Why you should participate on creditors' committees

In the U.S., the claim on the collateral must be "perfected" by registering it in a manner that provides other creditors with an opportunity to learn of the claim; still, courts are likely to disregard the agreement and retain the collateral in the estate of the insolvent firm, thus reducing the improperly collateralized creditor to general creditor status.

Bankruptcy law and large complex financial organizations: a primer

The Supreme Court held that the limited general creditor rights afforded to a trustee, under the then-current form of the Bankruptcy Act, did not include the powers of a judgment creditor, who could have defeated the equipment seller's unperfected claim to the equipment.

When do the creditors' shoes fit? A bankruptcy estate's power to assert the rights of a hypothetical judgment creditor

The paradigm of the disparate but homogenous general creditor is

Antibankruptcy

The former decisions prohibited a subscribing member from proving in competition with general creditors, whilst the latter allowed subscribing members to prove their claims under ch 6D.

Sons of Gwalia Ltd v Margaretic: the shifting balance of shareholders' interests in insolvency: evolution or revolution?

Since deferred compensation paid by a taxable entity outside of a tax-qualified plan is not subject to Section 457, income tax can be deferred until the compensation is paid even if the executive's rights to the benefits are fully vested-as long as the benefits are unfunded (i.e., the executive's rights to the benefits are no better secured than those of a general creditor of the association).

Supplemental Retirement Benefits Part II: Options for Deferred Compensation From Other Sources

Does the financing entity have to become a general creditor? Not necessarily.

Life insurance and the real estate industry

A plan is considered unfunded as long as plan assets, if any, are available to meet the employer's obligation to its general creditors, and plan participants have no greater security than that of any other general creditor of the employer.

Nonqualified plans of deferred compensation