Question

What is the role of senior creditors in the balance sheet of debtholders?

1) They have the highest priority in receiving payment from the debtholders.
2) They have the lowest priority in receiving payment from the debtholders.
3) They have equal priority with other debtholders in receiving payment.
4) They do not have any role in the balance sheet of debtholders.

Answer 1

Senior creditors have the highest priority in receiving payment from debtholders.

Step-by-step explanation:

Senior creditors play an important role in the balance sheet of debtholders. They have the highest priority in receiving payment from the debtholders. This means that they are the first in line to be paid back when the debtholder is making payments. This priority is based on the terms of the debt agreement and is usually outlined in the debtholder's legal documentation.