If the issuing company becomes insolvent,the claims of the bondholders are honored before those of preferred shareholders.

Question

Quizplus · Accepted Answer

Bondholders have priority in receiving payments during insolvency proceedings as their investment is considered debt and they are creditors of the company, whereas preferred shareholders are considered equity holders and are lower in priority for payment.

If the Issuing Company Becomes Insolvent,the Claims of the Bondholders