Absolute Priority
Categories: Financial Theory, Managed Funds
Who gets what, when Kingdom Comes (or at least in financial death)? Absolute priority stipulates that, for example, creditors get paid before pretty much anyone else. And there's a whole pecking order here. Creditors first. Like, the guy who redid all the toilets in the factory gets paid before, say, bondholders...even the most senior. Creditors get absolute priority in payback when the politician hits the fan and a company goes bust.
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Finance: What are Junior and Senior Debt...7 Views
Finance a la shmoop what are senior and junior debt? or like what's the
difference between them well what are they they're debt in a bankruptcy senior
debt collects what they're owed ahead of junior debt shockingly yep laws of the [Debt transferring to senior debt]
jungle remember the debt stack? vendors to the
company collect first then employees then the IRS of course because while
they always have their hands up in your bidness [Woman flips over stack of papers on womans desk]
then come senior bonds then come junior then come unsecured bonds also known as
debentures then subordinated debenture like debentures below debentures and
there are all kinds of granular things in the bonds above we're very sorry if
one day in your career you have to care about all of this okay then moving down [Man discussing debt stack]
the stack then there's preferred stock which collects after the most
subordinated debentures collect generally and then finally there's
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