What is senior debt?

In other words, senior debt can be classified as preferred debt.

In practice, imagine that a wind farm project, such as the Sainte-Lizaigne project, raises €300,000 on Enerfip, and that this debt is designated as "senior debt." This same project subsequently takes out a €23 million bank loan from Bank X to finance the necessary construction investments, in the form of subordinated debt (junior debt). If the company that raised the funds is liquidated for any reason, the available funds will first be used to repay the Enerfip contributors up to the amount of their commitments, and then, if any money remains, to repay the other creditors, including Bank X.

This example is described here for illustrative purposes only, and the reverse may also be true. It is possible that the crowdfunding is structured as subordinated debt and the bank loans as senior debt. It is therefore important to clearly identify the debt ranking of the project you are considering investing in on the project cards.

Refer to the Terms and Conditions of each project for more details.