Seniority sets who gets repaid first. Senior debt must be repaid before junior debt, and owners stand behind the lenders. Junior debt usually pays a higher rate for standing further back.
What the film says
In private credit, when a company goes under, who gets paid is a queue. It's called seniority. Senior debt gets repaid before junior debt. Owners stand behind them both. Say a failed company sells for a hundred million. Senior lenders are owed eighty. Junior lenders are owed forty. Senior goes first. All eighty. That leaves twenty. Junior gets twenty, out of forty. The owners get nothing. Now say it sells for a hundred and fifty. Both lenders are paid in full, a hundred and twenty. The owners get what's left. Thirty. So why do investors care? Same company. Very different outcomes. Junior debt usually pays more, because it stands further back. Read where you stand, not just what you're owed.
In the glossary: Unitranche
A simple example with round numbers, not advice. Terms vary by fund.
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