Who charges first in a bankruptcy?

Before delving into answering the question in the article, readers should know what it means to be in bankruptcy to know the context.

When you are in bankruptcy, It is because there is a legal procedure through which it is originated when a natural person (an individual) or a legal person (a company) does not comply with its insolvency situation and cannot face the payment of the debts that it owes.

When this happens, the company or the individual in question should be responsible for the expenses of the debt that will originate and, to the extent possible, repay said debt. Now, who is the first to collect in this situation? What is that order? We will clear these doubts below.

What is the order of collection in a bankruptcy?

When a company has entered bankruptcy, the bankruptcy administrator takes the reins and is the one who decides with whom the company in question will settle their account before. In general, the order is as follows (later, we will explain each one of them): credits against the estate, creditors with collateral or mortgage, workers, public administrations and suppliers and/or partners.

Credits against the crowd

These will be the first to collect. There are normally two types of credit: debts originated during the bankruptcy (called credits against the crowd) and those prior to the contest.

These credits It covers both the last 30 days of the salary of the employees of the bankrupt company, as well as the payments to be made after declaring bankruptcy. (including severance payments for objective or improper causes, the compensation of the bankruptcy administrator, etc.).

Bankruptcy credits

The next to collect will be bankruptcy credits, which are made up of privileged credits, ordinary credits and subordinated credits.

Privileged credits

It is the debt that is paid just after the credits against the estate have been paid, and is divided into two:

  • Credits with special privilege (Refactional credits). They are debts that have a mortgage or pledge guarantee.
  • Credits with general privilege. This includes, for example, the wages that have not been paid to workers for the delay, compensation, etc. Of course, there are certain limitations regarding the amount to pay.

Ordinary credits and subordinated credits

They are the last to collect their debt from the contest. The ordinary credits It is the other debt that is not classified in any of the categories described above. They usually include company providers (since they do not require a mortgage or pledge guarantee).

On the other hand, subordinated credits are the last to be collected, and are collections such as fines, penalties, debts with partners, interest on credits, etc. Honestly, he is one of the last and, at the same time, one of those that is rarely spoken because they hardly ever get paid.

What about banks and workers?

The truth is, incurring in a contest involves many decisions and annoyances for everyone. As much as possible, the company in question tries to avoid it: some creditors and suppliers put pressure on the company to prevent this from happening, just as financial institutions try to help the company (if they so wish).

The workers, on the other hand, will see their salary amount limited, even resorting to the Salary Guarantee Fund to be able to collect, at least, a maximum of 120 days and compensation. Of course, they must assume an annuity rate, and following guidelines that the calculation base does not exceed twice the daily SMI (as it happens in their daily salary).

Now that you know the order of payment of debts, it is time to know how long bankruptcy lasts, to be aware of the approximate length of this situation.