Need an answer for this question:
Company a (holdco) owns 100% of b (opco)
Who is more safer to loan out to?
I know has something to do with capital structure and seniority of debt. The answer is b but I don’t have a full answer for it
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So the Cashflows from earning of Company go like this Company B Revenues -> Company B Expenses -> Company B Debt Service -> Company B Equity (Becomes Cashflow of Company A) -> Company A Expenses -> Company A Debt -> Company A Equity
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