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L.6 · BEGINNER · 2 MIN

Capital Structure: Who Gets Paid First?

When a company faces financial trouble, not all creditors are equal. The capital structure determines who gets paid first and who takes losses.

Quiz · 5 questions ↓
§ 01
In the **Credit** view, explore the debt maturity wall and capital structure for any company. Notice how different debt tranches have different priorities.
§ 02

Understanding the capital structure is essential for credit investors. The same company can be a great investment at the secured level and a terrible one at the equity level.

§ 03
A company files for Chapter 7 (liquidation). Capital stack: $500M senior secured debt, $500M subordinated debt, equity. Asset sale nets $400M. Who gets paid?
Five questions · AI feedback

Sit with the ideas.

A company goes bankrupt. It has $500M in assets, $300M in senior secured debt, and $400M in senior unsecured debt. What do senior secured creditors receive?

Why:

Other lessons in this course.

  1. 01What Is a Bond?
  2. 02Price vs Yield: The Seesaw Relationship
  3. 03SOFR: The Rate That Replaced LIBOR
  4. 04Duration: Measuring Interest Rate Risk
  5. 05Credit Spreads: Pricing Default Risk
  6. 06Capital Structure: Who Gets Paid First?— reading now
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