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General Creditor

   Also found in: Legal 0.04 sec.
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.

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.


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An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt.
Thus, if general creditors receive preferred stock, subordinated creditors receive notes, and shareholders receive nothing, then general creditors and subordinated creditors are considered equity holders for purposes of determining whether the COI requirement is satisfied.
Such claim must not in any sense be proprietary and must not be subordinate to the claims of general creditors.
 
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