Seniority

The ranking of debts in the event of default from senior to junior (or subordinated). The most senior of an issuer's liabilities have the greatest claim to the assets of the entity in the event of default. Seniority can be defined contractually - where the terms of a liability indicate that it is junior to other liabilities - or it can be a result of the corporate structure of the borrower - for example, where lenders to an operating company have greater access to the defaulting group's assets than the creditors of a holding company which owns shares in the operating company.