If a company fails and declares bankruptcy, its physical and financial assets must be used to pay its bondholders before the stockholders can be paid.

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When a company declares bankruptcy, its bondholders have priority over stockholders in terms of receiving payment from the company's remaining assets. Bondholders are considered creditors and have a higher claim on the company's assets than stockholders, who are considered owners.

If a Company Fails and Declares Bankruptcy, Its Physical and Financial