Subordinated Debt
Subordinated Debt is a type of loan that ranks below other debts and loans in terms of claims on assets or earnings. It is repaid only after other debts have been settled in the event of a liquidation or bankruptcy.
Benefits
Subordinated debt is repaid after other debts in case of liquidation, offering a higher risk and potential return.
Frequently Asked Questions
What is a subscription agreement?
A subscription agreement is a contract for investors to buy shares in a company, detailing the investment terms.
What is the ranking of subordinated debt?
Subordinated debt has a lower repayment priority compared to other debts, meaning it`s paid only after higher-ranking debts are settled.
What is subordinated vs secured debt?
Subordinated debt is paid after secured debt in case of liquidation, making it riskier and usually carrying higher interest.
Key Takeaway
Subordinated debt is a type of loan that gets repaid only after other debts are settled in case of liquidation.