"Foreword" [2015] ELECD 615; in Dahan, Frederique (ed), "Research Handbook on Secured Financing in Commercial Transactions" (Edward Elgar Publishing, 2015) xx

Book Title: Research Handbook on Secured Financing in Commercial Transactions

Editor(s): Dahan, Frederique

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781781001837

Section Title: Foreword

Number of pages: 3

Extract:

Foreword


Creditors with a security interest are typically super-priority creditors on
the bankruptcy of the debtor, and indeed the whole purpose of a security
interest is to confer this priority on bankruptcy. One of the most
remarkable features of bankruptcy laws is that nowhere is there equality
of distribution of the assets of the bankrupt. Rather, there is a lengthy and
intricate ladder of priorities as creditors battle each other in climbing the
rungs of this ladder, fighting to escape the rising swirls of debt, gasping
for the bubble of oxygen at the top. To queue is human.
Security interests are one of the trio of these super-priority creditors,
which are evident to a greater or lesser extent in the jurisdictions of the
world. The identities of the three musketeers swaggering down the road
showing off their superiority are: (1) secured creditors; (2) creditors
entitled to bankruptcy set-off (and thereby able to get paid); and (3)
claimants who are beneficiaries under a trust ­ who can get back their
property held by the debtor in the debtor's own name, notwithstanding
that the property appears to belong to the debtor. An example is
custodianship.
The reception of each of these claimants is quite patchy around the
world, but the fact that they do claim primacy, and often get it, means
that their position sometimes raises eyebrows amongst those who are less
favoured.
The law and practice relating to security interests is by far the most
complex compared with ...