Priority Claim | Practical Law

Priority Claim | Practical Law

Priority Claim

Priority Claim

Practical Law Glossary Item 9-382-3707 (Approx. 2 pages)

Glossary

Priority Claim

Certain unsecured claims which are entitled to be paid in full before general unsecured claims are paid. These include administrative expenses and salaries, unpaid wages, employee benefits, consumer deposits, and prepetition taxes. All priority claims must be paid in full as a condition to confirmation of a plan of reorganization, subject only to waiver by the affected creditor. The Bankruptcy Code specifies the required treatment under a plan for each type of priority claim. For example, administrative claims and involuntary gap claims must be paid in full in cash on the plan's effective date. Priority claims are typically limited by dollar amount and time frames before the filing of the bankruptcy.