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Describe prefrential creditors according to the companies act |
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Answer» Answer: A PREFERENTIAL creditor (in some jurisdictions CALLED a PREFERRED creditor) is a creditor receiving a preferential right to payment upon the debtor's bankruptcy under applicable insolvency laws. In most legal systems, some creditors are given priority over ordinary creditors, either for the whole amount of their claims or up to a certain value. In some legal systems, preferential creditors take priority over all other creditors, including creditors holding security, but more COMMONLY, the preferential creditors are only given priority over unsecured creditors. In English law the concept was FIRST introduced for personal bankruptcy in 1825 pursuant to the Bankrupts (England) Act 1825, and for companies in 1888 pursuant to the Preferential Payments in Bankruptcy Act 1888. Prior to that, all unsecured creditors ranked equally and without preference in a series of statutes stretching back to the Statute of Bankrupts 1542. |
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