Legal Definitions - superpriority

Definition: Superpriority is a special priority status given by a court to a creditor who has extended credit to a debtor or trustee who cannot obtain unsecured credit from a willing lender. This priority can either be an administrative claim that outranks other administrative claims or, if certain statutory requirements are met, a security interest in property.

Example: Let's say a company is going through bankruptcy and needs to borrow money to keep its operations going. However, no lender is willing to lend them money without some form of security. In this case, a creditor may be granted superpriority status by the court, which means that they will have a higher priority than other creditors in getting paid back if the company's assets are sold off to pay off debts.

Another example: A trustee in bankruptcy may need to hire a professional to help with the administration of the bankruptcy estate. If the trustee cannot obtain unsecured credit from a willing lender, they may be able to obtain superpriority status for the professional's fees, which means that the professional will have a higher priority than other administrative expenses in getting paid back.

These examples illustrate how superpriority can be used to give certain creditors a higher priority in getting paid back in a bankruptcy case. This can be important for creditors who are taking on more risk by extending credit to a debtor who may not be able to pay them back without some form of security.