[Edit] Legally how is it. Not just because it's commonly measured in months of wages
They look really similar, but legally entirely different.
In "gardening leave" you're still an employee and on payroll until the last day. Whereas severance you're not an employee and typically paid lump-sum (but doesn't matter for this discussion). So in this specific situation, yes, that would be wages and would be paid out first before creditors because you are _legally_ entitled to those wages.
The problem of course you cannot hope to put a whole company on "gardening leave" in hopes that it can "act as severance" for everyone. Your creditors will sue you and easily win. They'd probably put an emergency injunction on the company and remaining funds before the first month was even completed once they learned of "creditors hate this one little trick!"
Way more commonly, severance is part of a termination contract, and thus it would not be here.
Are you European? Maybe it's different there.
My assumption was that we would not be talking about "unpaid severance" if there was no severance defined in the first place.
> Are you European? Maybe it's different there.
Generally severance is not legally mandated, but can be mandated under some specific circumstances, e.g. no-notice termination. Usually it is similar to US: either defined in collective (union) agreement or part of termination contract.
Usually severance is consideration for agreeing not to sue the company, not taking trade secrets, etc.
