Loan Documents, Bankruptcy, and Investor Claims

What this video covers

• Why senior debt carries a lower coupon than subordinated debt, and how mezzanine debt sits between the two with possible equity participation
• The difference between secured debt (specific collateral, direct claim) and unsecured debt (general claim, shared with other unsecured creditors)
• Affirmative covenants (must-do), negative covenants (must-not-do), and financial covenants (ratio maintenance), and how cross-default clauses cascade across the capital structure
• Why acceleration requires actual default plus expiration of any cure period, not merely anticipated trouble
• The role of the indenture trustee under the Trust Indenture Act of 1939, and why the trustee acts for bondholders, not the issuer
• Chapter 7 liquidation (entity ceases to exist) versus Chapter 11 reorganization (debtor-in-possession continues operating), and why Chapter 11 is not corporate death
• The exact Chapter 7 priority waterfall from secured creditors through administrative expenses, priority unsecured claims, general unsecured creditors, subordinated debt, preferred stock, and finally common shareholders
• Why a deficiency on secured collateral drops to the general unsecured bucket, and why subordinated debt still beats all equity
• The principal's three supervisory deliverables: risk factor disclosure of material covenants, going concern qualification, and distressed M&A priority verification