[P-Marlowe]

They are just an instrument in which a corporation will finance their operations. If they need $100,000,000 worth of equipment they can go to the bank and borrow it and pay exhorbitant interest rates, or they can sell $100,000,000 worth of bonds at much lower rates. The interest payout on bonds is usually much lower than what the banks would charge, but the secured bondholders would have a first lien on the company assets if the company can't pay back their obligations.

In this case the bondholders were moved to the bottom of the lienholders "list" so the company that was taking over Chrysler does not have to make the bondholders whole. In this case unsecured creditors were given priority.

Bonds are supposed to be a "safe" investment with a low return. That made them attractive to retirees, because they could always count on the money being there no matter what happened to the economy. Like "money in the bank".

Not anymore.

[xzins]

So if I buy a 1000 dollar chrysler bond, they’d have to pay me off before they could file bankruptcy, or would I have to be fully paid first out of the bankruptcy before they paid anyone else?