Secured creditor (Ro.: creditor cu creanța garantată, Fr.: créancier garanti, n.m./ titulaire d’une créance garantie, n.m., Gr.: ασφαλείς πιστωτές, Cz.: zajištění věřitelé, Cr.: osigurani kreditor/povlašteni kreditor) (See also: lien, mortgage lender, loans) = a creditor who holds security in the form of a legally enforceable claim on a debtor’s asset/assets.

The asset’s/assets’ liquidation value has to be at least equal to the lending’s value. In case the pledged asset is foreclosed, the secured creditor is entitled to receive the income. In bankruptcy, the secured creditors benefit from the most senior protection, their receivables being fulfilled before the unsecured creditors’ debts.

Unsecured creditor (Ro.: creditor chirografar, Fr.: créancier non garanti, n.m./ créancier chirographaire, n.m.) (See also: lien, mortgage lender, loans) = a creditor who holds no collateral from the debtor regarding the loan. 

In case of bankruptcy of the debtor, the unsecured creditor is paid after the receivables of all secured creditors are fulfilled.


Useful links

Legislation - French Civil Code, Chapter III, France [English] - German Civil Code BGB, Section 238, Germany [English] - Ukraine Law on Securing Creditors’ Claims and Registration of Encumbrances, Ukraine [English] - US Code, § 506, USA [English]

Online Publications - Mooney Jr., C.W., 2014, The Legitimacy of Bankruptcies for the benefit of secured creditors, PennLaw - Polo, A., 2012, Secured Creditor Control in Bankruptcy: Costs and Conflict, Eureka - Bergstrom, C., Eisenberg, T., Sundgren, S., 2002, On the Design of Efficient Priority Rules for Secured Creditors: Empirical Evidence from a Change in Law, Cornell University - Lennox, H., Harner, M. M., Goodman, E. R., 2007, Reinstatement v. Cramdown: Do secured creditors win or lose?, Jones Day - Adkisson, J., 2014, The series LLC and the Plight of Unsecured Creditors, Forbes


Blum, B. A., 2006, Bankruptcy and debtor/creditor, New York, Aspen Publishers

Broude, R. E., 1986, Reorganizations under chapter 11 of the Bankruptcy Code, New York, Law Journal Seminars-Press

Jackson, T. H., 2001, The logic and limits of bankruptcy law, Washington DC, Beard Books

Martin, N., Tama, O., 2008, Inside bankruptcy law: what matters and why, New York, Aspen Publishers

Peretore, F., 2008, Workouts and enforcement for the secured creditor and equipment lessors, New York, Oxford University Press


By Ioana Bărăian