in a bankruptcy proceeding, when the absolute priority of claims is enforced:
A) senior subordinated creditors rank above second lien holders.
B) preferred equity shareholders rank above unsecured creditors.
C) creditors with a secured claim have the first right to the value of that specific property.

Question

Quizplus · Accepted Answer

When the absolute priority of claims is enforced in a bankruptcy proceeding, creditors with a secured claim have the first right to the value of that specific property. This means that they have priority over unsecured creditors and equity shareholders. Senior subordinated creditors and preferred equity shareholders are not necessarily ranked higher than other creditors, as their priority depends on the specific terms of their contracts and agreements with the debtor.

In a Bankruptcy Proceeding, When the Absolute Priority of Claims