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Which creditor is exposed to the highest level of risk when lending to a company?

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Leading UK

When a creditor lends money to a company, it is taking a risk. Whether the creditor is a bank or other lending institution, a credit card or mortgage provider, bond purchasers or utility companies, or an individual, director or shareholder, lending money is a risky course of action, particularly if the debtor defaults on payments. That said, should a debtor default on their payments, some creditors are in a better position than others in seeing a return on their debt in respect of creditors voluntary arrangements, or even liquidations. This is because there is a set order of which creditor gets paid first, as detailed in the Insolvency Act 1986.

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