In the event of the bankruptcy of the borrower, the unsecured creditors will have a general claim on the assets of the borrower after the specific pledged assets have been assigned to the secured creditors.
Although in a liquidation the unsecured creditors will usually realize a smaller proportion of their claims than secured creditors.
In some legal systems, unsecured creditors who are also indebted to the insolvent debtor are able (and in some jurisdictions, must) set-off the debts, which actually puts the unsecured creditor with a matured liability to the debtor in a pre-preferential position.
Sheltering Unsecured Debt under A Secured Party's Security: Court of Appeal Suggests Practice May Be Acceptable under the Right Circumstances
Feb 04, 2013; In February 2012, we reported that the Saskatchewan Court of Queen's Bench ruled that an unsecured party could not shelter...