There’s such a thing as seniority of claims and it may often be the case that the mass of ordinary people don’t have the most senior claims but it isn’t about t

There’s such a thing as seniority of claims and it may often be the case that the mass of ordinary people don’t have the most senior claims but it isn’t about the size – investors (who, in some sense, have the most junior claims) will likely get hosed even though they’re big. I think there are two ways to think about this: 1. If you’re a company and you have N classes of debt then probably ‘ordinary people’ will all be in the same class (this can vary, eg if you’re a big retail store then wages owed will likely be a different more senior class of debt than anything you owe customers). So the more senior claims are more likely to be big companies as are the more junior claims, and it is unlikely that the ‘ordinary people’ class of debt will be the most senior. For FTX I expect the hedge funds and retail customers to have the same seniority. 2. Hedge funds, etc, will be able to retain lawyers and seek representation in the bankruptcy process in a way that is unaffordable to ordinary people. So they might end up with favourable timelines/restructurings or better accounting of what they’re owed but those arrangements can’t be that the big members of the class get a higher proportion of their money back than the smaller members.