Creditors who have the right to be paid before shareholders if a corporation liquidates have a:

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Creditors who have the right to be paid before shareholders if a corporation liquidates have a liquidation preference. Upon liquidation, the corporation will sell its assets and pay the creditors first. There are three types of liquidation preferences: straight preferred, participating preferred, and capped participating preferred; each varies in how favorable they are to the investor or to the liquidating company.

Creditors Who Have the Right to Be Paid Before Shareholders