Bondholders are creditors,and therefore they have a claim on the firm's assets that must be satisfied before any claims of stockholders in the event of the firm's bankruptcy,reorganization,or liquidation.

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In the event of a firm's bankruptcy, reorganization, or liquidation, bondholders, as creditors, have a priority claim on the firm's assets over stockholders. This means they are paid before stockholders if the firm's assets are distributed.

Bondholders Are Creditors,and Therefore They Have a Claim on the Firm's