Rights of Preferred Stockholders

What this video covers

• The absolute priority rule in liquidation: why secured creditors, unsecured creditors, and subordinated debtholders all get paid before preferred stockholders ever see a dime
• The exam trap that preferred stock is senior to common stock but junior to every class of debt, regardless of how much preferred stock is outstanding
• Why dividend preference means preferred gets paid first, not that preferred is guaranteed payment, and the board of directors must still declare any dividend
• How cumulative preferred stock accumulates dividends in arrears when undeclared, but only after the board eventually declares them
• Why preferred stockholders generally cannot vote for the board of directors and do not receive preemptive rights, which belong exclusively to common stockholders
• When contingent voting rights activate on preferred shares, typically after six consecutive missed quarterly dividends, and why this is the exception rather than the rule
• The full side-by-side comparison of preferred versus common across voting, preemptive rights, liquidation priority, dividend priority, fixed versus variable dividends, and growth participation