Which has Greater Safety in a Bankruptcy: Commercial Paper or Senior Bonds?
arnold asked:
Which would be given higher priority in a corporate bankruptcy: the firm’s outstanding commercial paper that it issued during the days/weeks before the bankruptcy or the senior bonds that have been outstanding?
Which would be given higher priority in a corporate bankruptcy: the firm’s outstanding commercial paper that it issued during the days/weeks before the bankruptcy or the senior bonds that have been outstanding?
Usually, the senior bonds will be safer, all other things being equal, but it depends on how severely stressed the company was before entering bankruptcy.
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