Senior debt is borrowed money a company repays first if the company goes out of business.Senior refers to the priority a financing source has over others when it comes time to retrieve the money the financing source invested in a company. For example, Conglomo Corporation obtains financing through bank loans and by issuing bonds and stocks. When the company declares bankruptcy and must liquidate its assets, senior debt holders like the bank and bondholders get paid first. Junior debt holders such as debenture holders are paid next. Then preferred stockholders, and then common stockholders. Investors who buy a company’s stock or bonds, should understand the priority of their claims to a company’s assets. The residual claim that common stockholders make on leftover assets may be worth little. Some banks require senior debt status to make a loan, while some bonds must pay higher interest to compensate for being subordinate to other creditors. Senior debt is secured by collateral, which can be sold to repay senior debt holders. But even senior debt holders may not receive the full amount they’re owed in some scenarios.