absolute priority rule

When a company files a bankruptcy petition, it exists the Absolute Priority Rule for that the creditors charged the debts that the company has with them before the shareholders divide the assets of the company. But there are different levels of priority between the creditors, for example, always the senior creditors are going to got theirs debts before the junior creditors, and the junior creditor are going to got theirs debts before shareholders divide what remains.

 

If the company have not got cash, in order to pay the company's liabilities, its assets will be sold.