Unsecured ordinary debts, Business Law and Ethics

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UNSECURED ORDINARY DEBTS:

A secured creditor obtains payment (to the extent that his security is adequate i.e. if it exceeds in value the amount owing to him) because he has a valid prior claim to that security. Unsecured creditors are paid out of the remaining assets, i.e. the aggregate of:

(a)any surplus value obtained by secured creditors in realising the assets which are their security and paid over to the liquidator, and

(b)any assets which are not subject to charges given to secured creditors.
But two special claims have to be given their due priority, i.e.

(a)costs of winding up including the legal expemses and liquidator's remineration, and

(b)preferential unsecured debts.


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