Secured Creditor

Category: legal

A creditor who holds a legal claim (lien) on specific property of the debtor to guarantee payment of a debt.

Secured creditors have "collateral." A bank holding a mortgage on a warehouse is secured. If the company goes bankrupt, the secured creditor has the right to the value of that specific warehouse before anyone else can touch it. They are in the safest position in insolvency.

Common Examples

• As a secured creditor, the equipment financier was able to repossess the manufacturing robots despite the company’s insolvency.
• The secured creditor was paid in full from the proceeds of the 363 sale, while unsecured creditors received pennies on the dollar.