It's called a "liquidation preference". http://www.investopedia.com/terms/l/liquidation-preference.asp http://www.investopedia.com/terms/l/liquidation-preferen

It's called a "liquidation preference". http://www.investopedia.com/terms/l/liquidation-preference.asp http://www.investopedia.com/terms/l/liquidation-preference.a... The mechanics & technicalities are beyond me, but the consequence is as described above.