If a company defaults on bonds, who gets repayment priority?

Question

In the event of default, ___ debt holders must give preference to more ___ debt holders in the priority of repayment distributions.
A. short-term; long-term
B. long-term; short-term
C. senior; junior
D. senior; subordinated
E. subordinated; senior

I have looked through the entire chapter, I see stuff about repayment, and how you loose money etc, but nothing about who gets priority in repayment.

Answer 1

E
Subordinated debtholders must give preeference to more senior (seniority) debt holders in the priority of repayment distributions.

Also, any debt that is collateralized gets paid first and this question is asked in a tricky way.

Answer 2

E.

In the case of a default, senior debt gets satisfied first. Then comes the subordinated debt, in the order of their seniority.

Answer 3

Is this not a rather common-sense kind of question? E.