Stuck positions
Does a senior lender always get paid first?
No. A senior secured lender can still sit behind statutory claims, insolvency costs, and employee wages, and a court-ordered rescue financing can push your first lien to second position entirely.
The term sheet label describes your position in one entity, on one day, under one country's law. All three can move against you. The capital structure is only the lower half of the actual queue.
Statutory claims rank above every tier of the stack, however you papered it. In most common-law countries, insolvency costs and workers' wages are paid out of a floating charge holder's own collateral before that lender sees a cent. If you lent against inventory, the employees get paid first.
Most modern restructuring regimes also let a court grant new rescue money a security interest ranking equal to or ahead of an existing secured lender. Your first lien becomes a second lien through a court order, in a proceeding you didn't start, and if there isn't enough value beneath the new money you can be wiped out entirely.