When a bank goes bankrupt, who gets priority for payback: its bondholders or depositors?
Jan Meriss Alfonso Assistant at Ascent Law LLC Debt holders with equity security interests are the first priority during bankruptcy. Next come Non-Priority Unsecured claims. Those with common stock, on the other hand, have the least priority during bankruptcy. While common stock gives the owner the most control over the company, it has the lowest priority during bankruptcy. Equity security interest holders are the priority during bankruptcy When a Debtor files for bankruptcy, equity security interest holders are the first to be considered. Equity security interest holders include corporations, limited partners, and other entities that have stock equity or ownership interests in a Debtor. They can also include persons who have reserved the right to buy, sell, or otherwise acquire new warrants. However, the priority system does not work the same way in unsecured creditors. For example, non-priority unsecured creditors are given only a partial claim value and are not given first dib...