Secured creditor
A creditor whose debt is backed by a charge over the company's assets. Secured creditors rank ahead of unsecured creditors when assets are distributed.
A secured creditor holds either a fixed charge (over a specific identified asset, like a building) or a floating charge (over assets that change from time to time, like stock or receivables). On insolvency, the floating charge crystallises into a fixed charge over whatever assets exist at that moment. The secured creditor is paid first out of the proceeds of the asset over which they hold security, subject to a small statutory prescribed part being set aside for unsecured creditors.
