Liquidation - order of claims - waterfall.
The concept of an unsecured creditor is important in a liquidation, or any potential liquidation or other situation of financial distress or risk of insolvency.
Unsecured creditors have no special rights.
For this reason they rank lower than other classes of creditors including secured creditors and preferential creditors.
Examples of unsecured creditors would typically include most suppliers, contractors and customers.
Unsecured creditors are at relatively greater risk of losses.