Series 79: 14.2.2. Unsecured Claims

14.2.2. Unsecured Claims

All other claims made in a bankruptcy are unsecured claims. Unsecured claims are in turn divided into priority claims and general unsecured claims. The following are the priority unsecured claims most relevant to business liquidations, in descending order of priority (i.e., claims higher on the list get paid first):

• Claims for administrative expenses of the bankruptcy, including trustee fees, legal fees, and other professional fees. Subject to the approval of the bankruptcy court, administrative expenses in a Chapter 11 bankruptcy may also include certain costs of continuing to operate the business during bankruptcy, such as DIP financing or wages for work performed after the company filed for bankruptcy. It may seem odd that this would be given priority over wages for work performed before the company filed for bankruptcy. However, these and other administrative expense claims are prioritized over other unsecured claims for a very good reason: if they weren’t