Junior Issue

DEFINITION of 'Junior Issue'

A corporate security that ranks lower in claim to another corporate security in terms of dividends, interest or principal repayment if the company goes out of business. Junior issues can be in the form of debt or equity. A junior issue is the opposite of a senior issue, which has priority if a company liquidates.

BREAKING DOWN 'Junior Issue'

Specific types of securities are not always inherently junior are senior; they are junior or senior relative to other types of securities. The absolute priority rule, also called liquidation preference, dictates the order in which shareholders and creditors must be repaid when a company goes under. For example, if there are preferred shareholders, they must be repaid before common shareholders - thus, the common stock would be considered the junior issue.

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