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IMHO conventional Equity is not "equitable" in terms of sharing risk and reward, and neither is a Debt contract. If you combine the two by using debt secured over assets owned by a company then you get two conflicting claims over the same asset

There's no conflict. Lenders are "senior secured", ie they get first dips on the security when it is invoked - until they get paid. In normal times, they are entitled to specific payments; if these payments cannot happen, then they can make a claim on security. This is all laid out in the financial documentation. The legal form is fundamentally irrelevant, what matters is the precise definition of the rights and obligations of each party.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jan 19th, 2008 at 12:16:57 PM EST
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