Priority

Definition:

The order in which a company’s creditors have rights to receive the company’s assets to discharge the company’s obligations in the event of Bankruptcy. In general, secured creditors rank highest, followed by unsecured creditors, followed by equity holders, who have the right to distribution of the assets then left (if any). Priority can be determined by contractual agreements between creditors, such as Intercreditor Agreement and Subordination Agreement, by virtue of the structure of the group, or by the order in time when which the obligations arose.

See also Subordination and Subordinated Debt.

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