Chapter 7
A bankruptcy proceeding in which a company stops all operations and goes completely out of business. A trustee is appointed to liquidate (sell) the company's assets, and the money is used to pay off debt. Investopedia Says:
The investors who take the least risk are paid first. For example, secured creditors take less risk because the credit that they extend is usually backed by collateral, such as a mortgage or other asset of the company. Next in line are the unsecured creditors, and then the investors. This phenomenon is known as "absolute priority". Related Terms:
Absolute Priority
Bankruptcy
Chapter 11
Chapter 13
Discharge In Bankruptcy
Distressed Securities
Prepackaged Bankruptcy |