Preference
1. Liquidation - claims - insolvency.
In insolvency, a preference is the undue favouring of one creditor over others.
For example, by favouring a creditor lower down the waterfall priority ordering of claims, over others higher up the order.
A court can order that the position be restored to what it would have been, if the unduly favoured creditor had not been given this advantage.
2. Creditors hierarchy - seniority.
The legitimate ranking of some creditors, or classes of creditors, above others.
- Bank recovery, resolution and bail-in
- "The implications for investing corporate cash with banks, be that directly through deposits or indirectly via a money market fund, are very significant.
- Any credit assessment will need to build in consideration of the exact entity you are dealing with, the make-up of its funding mix, the hierarchy of preference for the different funding providers, any ring fencing and the entity’s relationship with and risk from other businesses in the same group, and any applicable local regulations."
- Cash in the new post-crisis world - Stephen Baseby - Associate policy and technical director, ACT
The legitimately advantaged creditors are sometimes known as preferential.
Examples include preference shareholders.
3. Investment.
Individual or corporate motivation for investment choices or other economic decisions.
For example, liquidity preference.
