Rights of Preferred Stockholders

What this video covers

• The absolute priority rule in liquidation: secured creditors, unsecured creditors, subordinated debtholders, preferred stockholders, then common stockholders
• Why preferred stock is senior to common but junior to all debt, and what that means when assets are insufficient to pay every claim
• Why "preference" does not mean "guarantee": the board of directors must declare a dividend before any stockholder is owed payment
• When preferred stockholders receive dividends relative to common stockholders, and what happens if the board declares no dividend at all
• Why preferred stockholders generally lack voting rights, and the limited exception of contingent voting rights after missed dividends
• Why pre-emptive rights belong to common stockholders, not preferred stockholders
• The side-by-side comparison of preferred versus common across voting, pre-emptive rights, dividend priority, liquidation priority, fixed versus variable dividends, and growth participation