HopefullyInLawSchool
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LSDefine
Simple English definitions for legal terms
priority claim
Read a random definition: Requirements contract
A quick definition of priority claim:
A priority claim is a type of claim that must be paid before other claims in a bankruptcy case. This means that if someone owes money to many different people, the ones with priority claims get paid first. There are nine different types of priority claims, including things like taxes, employee wages, and child support.
A more thorough explanation:
A priority claim is a type of claim that must be paid before other claims. This type of claim is often seen in bankruptcy cases where certain claims are given priority over others. The Bankruptcy Code sets forth nine classes of claims, to be paid in order of priority:
- Administrative expenses of the bankruptcy estate
- Involuntary gap claims
- Wage claims
- Contributions to employee benefit plans
- Claims of grain farmers and fishermen
- Consumer deposits
- Alimony, maintenance, and child-support claims
- Tax claims
- Capital requirements of an insured depository institution
For example, if a company goes bankrupt and owes money to its employees, the employees' wage claims would have priority over other unsecured claims.