A secured creditor is a creditor with the benefit of a security interest over some or all of the assets of the debtor.
In the event of the bankruptcy of the debtor, the secured creditor can enforce security against the assets of the debtor and avoid competing for a distribution on liquidation with the unsecured creditors.
In most legal systems, secured creditors also have the option of releasing their security and proving in the liquidation, although, in practice, they would rarely do so.
Famous quotes containing the words secured and/or creditor:
“[If not re-elected in 1864] then it will be my duty to so co-operate with the President elect, as to save the Union between the election and the inauguration; as he will have secured his election on such ground that he can not possibly save it afterwards.”
—Abraham Lincoln (1809–1865)
“A certain creditor had two debtors; one owed five hundred denarii, and the other fifty. When they could not pay, he canceled the debts for both of them. Now which of them will love him more?”
—Bible: New Testament, Luke 7:41,42.