Who has the lowest priority in bankruptcy proceedings?

In bankruptcy proceedings, general unsecured creditors typically have the lowest priority among the various classes of claims. This category includes individuals and businesses that are owed debts that are not backed by any collateral. Unlike secured creditors, who have a legal claim to specific assets if a debtor fails to pay their debts, general unsecured creditors do not have such security.

In the hierarchy of claims established by bankruptcy law, secured creditors are prioritized first because they have collateral to claim in the event of default. Following them, employees owed wages, as well as governmental tax claims, also enjoy higher priority compared to general unsecured creditors. Employees' wage claims often have a cap and are prioritized to ensure that individuals who rely on their wages are compensated. Similarly, governmental tax claims are prioritized as a means of maintaining the public interest and ensuring tax revenues for government operations.

This established priority ensures that those with more substantial claims to repayment, either due to collateral or essential public interest, are satisfied before the claims of general unsecured creditors are considered.