Waterfall: Difference between revisions
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imported>Doug Williamson (Add priority ordering in liquidation.) |
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The priority order of claims in a liquidation. | The priority order of claims in a liquidation. | ||
Broadly speaking, this priority order is: | |||
#Secured creditors | |||
#Preferential creditors | |||
#Fixed charge creditors | |||
#Floating charge creditors | |||
#Unsecured creditors | |||
#Connected unsecured creditors | |||
#Shareholders | |||
Breaching this ordering is a ''preference'', that can be effectively reversed by an order of the court. | |||
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== See also == | == See also == | ||
* [[Agile]] | * [[Agile]] | ||
* [[Connected company]] | |||
* [[Connected person]] | |||
* [[Court]] | |||
* [[Creditors]] | |||
* [[Equity]] | * [[Equity]] | ||
* [[Fallback]] | * [[Fallback]] | ||
* [[Fixed charge]] | |||
* [[Floating charge]] | |||
* [[Funding stack]] | * [[Funding stack]] | ||
* [[Junior debt]] | * [[Junior debt]] | ||
* [[LIBOR]] | * [[LIBOR]] | ||
* [[Liquidation]] | * [[Liquidation]] | ||
* [[Preference]] | |||
* [[Preferential creditor]] | * [[Preferential creditor]] | ||
* [[Risk-free rates]] | * [[Risk-free rates]] | ||
* [[Secured creditor]] | |||
* [[Security]] | |||
* [[Senior debt]] | * [[Senior debt]] | ||
* [[Seniority]] | * [[Seniority]] | ||
* [[Subordinated debt]] | * [[Subordinated debt]] | ||
* [[Unsecured debt]] | |||
* [[Valuation]] | * [[Valuation]] | ||
* [[Waterfall methodology]] | * [[Waterfall methodology]] | ||
Revision as of 02:11, 29 May 2021
1. Liquidation - claims.
The priority order of claims in a liquidation.
Broadly speaking, this priority order is:
- Secured creditors
- Preferential creditors
- Fixed charge creditors
- Floating charge creditors
- Unsecured creditors
- Connected unsecured creditors
- Shareholders
Breaching this ordering is a preference, that can be effectively reversed by an order of the court.
2. Liquidation.
The allocation of - usually limited - available funds in this priority order in a liquidation.
3. Allocating limited funds.
Any other ranked allocation of funds.
4. Risk-free rates - valuation.
Abbreviation for waterfall methodology.
- Uniform determination methodology
- From mid-2018 a new, uniform determination methodology, the “waterfall methodology”, by which each contributing bank calculates the rates it submits, was progressively introduced. The underlying interest - the market or economic reality that the benchmark seeks to measure - remains the same.
- The “waterfall” methodology refers to the three bases for a bank’s rate submission... the first practical method being used in any case according to the information available...
- The three bases in the LIBOR waterfall are:
- Level 1: Transaction-based
- Level 2: Transaction-derived
- Level 3: Expert judgement
- In summary, the new methodology is more rooted in actual transactions as far as possible. Using less “judgement” that can involve a (possibly unconscious) element of “smoothing”, contributed rates are expected to vary up and down more by small amounts each day. And, recognising the reality that banks short-term-fund in the wider money-markets now, rather just inter-bank, the range of transactions considered is being widened and this can mean small rate differences.
- Following the successful completion of the transition period, LIBOR is now, for each currency/maturity combination, the rate output as the arithmetic mean of the relevant panel banks’ waterfall-methodology based submissions, excluding the highest and lowest quartile of submissions.
- The Treasurer's Wiki - LIBOR.
See also
- Agile
- Connected company
- Connected person
- Court
- Creditors
- Equity
- Fallback
- Fixed charge
- Floating charge
- Funding stack
- Junior debt
- LIBOR
- Liquidation
- Preference
- Preferential creditor
- Risk-free rates
- Secured creditor
- Security
- Senior debt
- Seniority
- Subordinated debt
- Unsecured debt
- Valuation
- Waterfall methodology
