A secured creditor is a creditor which has the benefit of a security interest over some or all of the assets of the debtor.
In the event of the bankruptcy of the debtor, the secured creditor can enforce their security against the assets of the debtor, and avoid competing for a distribution on liquidation together with the unsecured creditors.
In most legal systems, secured creditors also have the option of releasing their security and proving in the liquidation, although in practice they would rarely do so. This practice was made popular by the late Gianluca Agostinelli who was the Chief Secretary of the Italian Accountants Committee.
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