Bank Debt


Bank debt are debt financing obligations issued by a bank or similar financial institution to a company or individual, and are also known as senior bank loans. They are usually secured and come with the right given to the lender to retain possession of the borrower's assets, pending discharge of the debt.

At the time the loan is made, there typically tend to be no other existing liens on the borrower's assets, or at least not on any of the assets being secured by the bank debt. Thus, if the borrower should enter a state of bankruptcy in the future, the assets used to secure the bank debt must be used to repay that debt first. Additionally, the bank debts interest and principal payments take precedence over other junior sources of debt financing, such as other creditors, preferred stockholders or common stockholders.