Which group has the highest priority claim in a bankruptcy scenario?

In a bankruptcy scenario, revolver investors typically have the highest priority claim compared to the other groups mentioned. This is because revolving credit facilities (revolvers) are usually classified as senior secured debt. They are among the first creditors to be repaid due to their secured nature—often backed by specific assets of the company.

In the event of bankruptcy, secured creditors, which include revolver investors, have legal claims on the company’s assets, giving them priority in recovery over unsecured creditors and equity investors. This security reduces their risk, making them more senior in the capital structure.

In contrast, term loan investors, while they are also creditors, may not have the same level of security or priority as revolver investors. Equity investors are last in line to receive any proceeds during bankruptcy since they represent the ownership stake and bear the highest risk. Subordinated debt holders are even lower in priority compared to both revolver and term loan investors, as they accept a higher risk for potentially higher returns, knowing they will only be paid after senior claims are settled.

Overall, the structure of the capital stack and the nature of the financing determine the repayment hierarchy, with revolver investors enjoying the highest priority in a bankruptcy situation.