The term “priority” refers to the order in which applicable law demands that the claims against a debtor must be paid. Financially distressed parties commonly do not have enough money to pay all their creditors (that is, the holders of claims against them) in full. The law provides in such situations that certain types of claims must be paid in full before other types of claims can be paid at all. The term “priority” is used to describe this, with a claim of “senior” priority being entitled to 100% payment before a claim of lower priority may be paid anything. For more information, read The Order of Claims in Bankruptcy: Absolute Priority Rule, Structured Dismissals and More.

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