Basic introduction to super senior, senior, mezzanine and junior debt


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Restructuring & Insolvency expert
Practice notes

Basic introduction to super senior, senior, mezzanine and junior debt


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Restructuring & Insolvency expert

Practice notes
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The range of funding Options open to companies has exploded, resulting in a vast array of different capital and security structures. Before the 2007/8 credit crunch, it was common to see senior Debt (usually held by banks), followed by mezzanine debt and then Junior debt, all of which ranked above unsecured creditors and shareholders/equity holders.

Immediately following the 2007/8 credit crunch, banks were less willing or able to lend new monies and so companies increasingly looked to the capital markets to maximise access to credit. This has resulted in more layers of debt plus the emergence of senior secured bonds, which rank much higher up the capital structure (see Practice Note: Bonds and notes) and super senior facilities.

Capital structures

Traditionally, external debt was incurred at the operating company (Opco) level; Opcos hold the main assets of the business (eg premises, key manufacturing equipment and valuable IP licences) and generate the bulk of the profits. Accordingly, lenders were keen to take security over these assets. Lending may also take place at the holding

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United Kingdom
Key definition:
Junior debt definition
What does Junior debt mean?

debt that is subordinated to or otherwise ranks behind senior debt.

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