subordinated

Definition

In finance, debt or claims that get paid last in the hierarchy of bankruptcy proceedings—basically the financial equivalent of standing at the back of the line. Subordinated debt holders only get paid after senior creditors are satisfied, making it riskier but typically offering higher returns. It's the 'you'll get yours if there's anything left' category of obligations.

Example Usage

The investors in subordinated debt learned too late that 'higher returns for higher risk' sometimes means 'you get nothing when things go sideways.'

Source: Corporate finance and bankruptcy terminology

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