12 Sep 2026

The Collateral Did Not Move. Your Priority Did: What Rescue Finance Reveals About Secured Claims

airBaltic’s proposed rescue financing shows why “senior secured” is not a permanent property of a debt instrument. The airline is seeking approval to raise up to €257 million of new super-senior debt that would rank ahead of existing 2029 bonds against collateral including eight aircraft and seven engines, while some existing holders could exchange into a new second-priority tranche and the remaining 2029 notes would fall to third priority. The collateral itself does not need to move for the...

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Topics creditor priority Primary restructuring rescue finance secured debt collateral bondholder consent

A bond can keep the same name.

The same maturity.

The same issuer.

The same collateral pool.

And still become a materially different asset for the investor.

The reason is simple:

Creditor priority can change even when the collateral does not.

airBaltic’s 2026 rescue-financing process provides a unusually clear example.

The Latvian airline is seeking approval to raise up to €257 million of new super-senior debt due in February 2027.

Reuters reported that the proposed new money would receive first priority against collateral including eight aircraft and seven engines.

Existing holders that participate in an uptier exchange would move into a second-priority position.

The remaining 2029 bonds would fall to third priority.

Reuters: airBaltic bond yields soar as embattled carrier faces crunch creditor meeting

The bondholder meeting originally scheduled for 11 September was postponed to 15 September to give investors more time to review and vote.

Reuters: airBaltic’s options ‘quite limited’ if stakeholders reject funding plan, says Fitch

That timing matters.

As of this article’s drafting, the new ranking is proposed, not yet a completed fact.

But the structural lesson already exists.

A security described at issuance as senior secured does not carry an immutable priority label forever.

“Senior secured” is not one permanent fact

At issue date, a bond can be described as:

Senior secured

That label can be accurate.

Later, the issuer can seek:

new-money financing;
super-senior financing;
additional liens;
permitted liens;
priming debt;
debt exchanges;
uptiering;
covenant waivers;
maturity extensions;
amendments;
releases;
collateral substitutions; or
intercreditor changes.

The original label may still appear in the bond documents and market data.

The investor’s relative position may no longer be the same.

The collateral can stay exactly where it is

This is what makes the airBaltic example so useful.

The core question is not necessarily:

Did the aircraft move?

or:

Were the engines sold?

The economically important change can instead be:

Who gets paid first from the same collateral?

Suppose a collateral pool is worth 100.

At the beginning:

Collateral value: 100

Claim A: 80
Priority: First

Later, new rescue financing is added:

Collateral value: 100

New Money Claim B: 30
Priority: First

Uptiered Claim A1: 40
Priority: Second

Remaining Claim A2: 40
Priority: Third

Nothing in this simplified example requires the collateral itself to change.

The waterfall changed.

Priority is a relationship between claims

A useful secured-debt system should not store priority only as:

Priority: Senior

Priority exists relative to:

another claim;
the same collateral;
a security agreement;
an intercreditor arrangement;
contractual subordination;
statutory rights;
insolvency rules;
enforcement costs; and
sometimes jurisdiction-specific priority rules.

The stronger question is:

Senior to what?

One collateral pool can support several claims

A secured financing can contain:

Collateral
    ->
Claim A
    ->
Claim B
    ->
Claim C

Each claim may have:

different maturity;
different coupon;
different security;
different ranking;
different guarantors;
different enforcement rights;
different amendment rights; and
different voting thresholds.

Calling all three:

Secured debt

does not tell the investor enough.

New money can change the old investor’s recovery path

Rescue finance frequently raises a difficult trade-off.

The company needs new liquidity.

Without that liquidity, default may become more likely.

But the new lender may demand:

first-priority security;
super-senior ranking;
enhanced covenants;
fees;
equity participation;
control rights; or
another protection.

Existing creditors may therefore be asked to accept a weaker relative position in exchange for a better chance that the company survives.

That is not automatically good or bad.

It is a restructuring decision.

But the asset record must show that the position changed.

The claim itself has a lifecycle

A bond can move through states such as:

Issued
    ->
Outstanding
    ->
Amended
    ->
Coupon capitalised
    ->
Covenant waived
    ->
Priority change proposed
    ->
Holder consent requested
    ->
Exchanged / not exchanged
    ->
New ranking effective

The instrument identifier can remain the same through much of this sequence.

The legal and economic rights do not.

Amendments are asset events

A bond amendment should not be stored as another PDF in a folder without changing the structured record.

The amendment may alter:

coupon;
maturity;
payment timing;
liquidity covenant;
collateral;
guarantor coverage;
voting threshold;
quorum;
permitted debt;
permitted liens;
enforcement;
priority; or
waiver status.

The document matters because it changes the asset.

airBaltic’s document history shows why versioning matters

airBaltic’s investor-relations site lists the original bond documentation together with:

supplemental trust deeds;
amendments to mortgage agreements;
amendments to asset-pledge agreements;
additional security documents;
security assignments; and
bondholder-meeting materials.

airBaltic Investor Relations: Bonds 2024

That is normal for a financing that evolves.

It is also exactly why:

Original prospectus

cannot safely be treated as:

Current rights

Current terms require a document chain

A reviewer may need to reconstruct:

Original trust deed
    ->
Supplemental trust deed 1
    ->
Supplemental trust deed 2
    ->
Bondholder resolution
    ->
Current effective terms

If a later document overrides an earlier one, the system should say so.

The reviewer should not need to infer the current position by manually comparing hundreds of pages.

Consent is itself an asset event

A restructuring proposal may require investor consent.

The process can contain:

Notice issued
    ->
Meeting convened
    ->
Quorum checked
    ->
Vote
    ->
Threshold reached / not reached
    ->
Resolution effective / failed

Each state matters.

In airBaltic’s case, the meeting date itself changed.

That means a system should distinguish:

Vote scheduled

from:

Vote held

and from:

Resolution passed

A press headline about a proposal should never become a structured field saying:

Priority changed

before the legal event occurs.

Pending and effective are different

This is a general restructuring rule.

A company may announce:

Proposed super-senior facility

That is not the same as:

Executed super-senior facility

Likewise:

Bondholder support

does not necessarily equal:

Required formal consent completed

A time-aware Asset Passport should preserve:

Proposed
Approved
Executed
Effective
Funded

as separate states.

Quorum can change the practical meaning of voting rights

Bondholder governance is not only about percentage approval.

It may involve:

quorum;
adjourned meetings;
record dates;
proxy instructions;
eligible voters;
voting exclusions; and
different thresholds for reserved matters.

The infrastructure lesson is broader:

Governance rights are part of the asset.

Uptiering creates multiple classes from one creditor base

Reuters reported that participating airBaltic holders could exchange into a new senior tranche ranking behind the rescue debt but ahead of the remaining 2029 notes.

That means holders of what was originally one bond issue can end up with economically different claims.

Original 2029 Notes
    ->
Participating holder
        ->
Uptiered second-priority claim

Original 2029 Notes
    ->
Non-participating holder
        ->
Third-priority claim

The investor base has forked.

The instrument record may need to fork too

If different holders obtain different rights, the system needs to know:

which holder exchanged;
what was delivered;
what new instrument or entitlement was received;
what principal amount moved;
what remains outstanding in the old instrument;
what ranking applies to each class;
which collateral secures each class; and
when the exchange became effective.

A single static bond master is no longer enough.

Recovery waterfall is a separate object

A distressed-credit investor wants to know what happens when available value is distributed.

A simplified waterfall may be:

Enforcement costs
    ->
Super-senior debt
    ->
Second-priority debt
    ->
Third-priority debt
    ->
Unsecured claims
    ->
Equity

Real structures may be much more complicated.

The important point is that the waterfall should be explicit.

Collateral value and claim priority are different

Suppose a bond is secured by aircraft.

A valuation may say:

Aircraft collateral value: €200m

That does not tell the investor its recovery.

The investor also needs:

Claims ahead of me

Enforcement costs

Other security

Jurisdiction

Priority

A collateral valuation without the claim stack is incomplete.

Collateral coverage can deteriorate without collateral value falling

Suppose collateral remains worth €200m.

Initially:

Senior claim: €150m

Then €100m of super-senior debt is added.

The collateral value is unchanged.

The original holder’s effective coverage can deteriorate sharply.

Therefore:

Collateral coverage depends on both asset value and claim stack.

A secured-debt Asset Passport needs several layers

Instrument identity

issuer;
instrument;
identifier;
issue date;
maturity;
currency;
original principal;
current principal;
coupon;
listing;
governing law; and
current status.

Holder claim

holder;
principal held;
accrued amount;
current entitlement;
exchange participation;
amended rights;
class; and
as-of date.

Collateral

asset;
owner;
security provider;
security agreement;
registration;
jurisdiction;
current value;
valuation date;
competing security;
release status; and
provenance.

Ranking

priority class;
claims ranking ahead;
claims ranking pari passu;
claims ranking behind;
contractual source;
intercreditor source;
effective date;
proposed / approved / effective state; and
reviewer.

Amendments and waivers

document;
affected provision;
original term;
amended term;
approval date;
effective date;
expiry;
holder consent;
waiver scope; and
superseded version.

New money

facility or instrument;
lender;
amount;
maturity;
interest;
security;
ranking;
use of proceeds;
commitment;
funding state;
effective date; and
refinancing plan where disclosed.

Governance

meeting;
notice;
record date;
quorum;
threshold;
eligible holders;
vote;
result;
resolution;
effective date; and
source.

Enforcement waterfall

enforcement costs;
priority classes;
collateral allocation;
proceeds order;
standstill;
control rights;
release rights;
scenario;
governing document; and
as-of date.

Provenance

prospectus;
trust deed;
supplemental trust deed;
security agreement;
intercreditor agreement;
holder notice;
company announcement;
exchange document;
registry;
valuation;
AI-extracted field;
legal review;
effective date;
version; and
last updated timestamp.

That turns “senior secured bond” from a label into a current legal-economic map.

AI can reconstruct the capital stack—but should not determine priority

AI can help extract:

principal amounts;
maturities;
coupons;
collateral schedules;
guarantors;
priority clauses;
amendment dates;
voting thresholds;
meeting dates;
waiver terms;
exchange ratios;
new-money terms; and
effective dates.

Across a financing, AI can flag:

a summary using an old ranking;
collateral released by a later amendment;
a new lien not reflected in the overview;
a holder exchange creating a different claim class;
a proposed priority change presented as effective; or
an old waterfall still used after restructuring.

AI should not independently conclude:

that an amendment is legally valid;
that required consent was obtained;
that security is perfected;
that one claim legally ranks ahead of another;
that an intercreditor provision is enforceable; or
what recovery a creditor will receive.

Those are legal and restructuring conclusions.

What DaDepo can contribute

DaDepo does not need to negotiate a restructuring.

The useful role is information infrastructure.

DaDepo can help connect:

Instrument
    ->
Holder claim
    ->
Collateral
    ->
Priority
    ->
Amendments
    ->
New money
    ->
Consent
    ->
Current waterfall

That makes it easier to answer:

what instrument the investor holds;
which collateral supports it;
what claims rank ahead;
when ranking changed;
which document changed it;
whether the change is proposed or effective;
whether the holder exchanged;
which governance process approved the change; and
what waterfall applies today.

What DaDepo does—and does not do

Creating or reviewing a secured-debt Asset Passport does not mean that DaDepo has:

determined legal priority;
confirmed perfection;
valued collateral;
calculated recovery;
approved rescue financing;
determined whether a bondholder should consent;
interpreted a trust deed;
determined whether an amendment is enforceable;
represented a creditor;
negotiated a restructuring;
operated a bondholder meeting;
exercised enforcement rights; or
provided legal, restructuring, insolvency or investment advice.

Important: DaDepo provides technology and information tools. It does not provide legal, restructuring, insolvency, trustee, lending, investment, enforcement or valuation advice or services unless a specific service is expressly identified and lawfully provided.

A practical creditor-priority checklist

Instrument: Which debt instrument is being reviewed?
Holder: What claim does this holder currently own?
Principal: What amount is outstanding?
Collateral: Which assets secure the claim?
Security: What document creates that security?
Competing claims: Which creditors share the collateral?
Priority: Which claims rank ahead?
Pari passu: Which claims share the same level?
Subordination: Which claims rank behind?
Source: Which document establishes ranking?
Amendments: Has that document changed?
Waivers: Which temporary waivers are effective?
New money: Has rescue financing been proposed or funded?
Priming: Would it rank ahead?
Consent: Is creditor approval required?
Meeting: Has the vote actually occurred?
Threshold: What approval threshold applies?
Quorum: Was quorum satisfied?
Exchange: Can holders exchange into a different priority class?
Participation: Did this holder exchange?
Current class: What claim class applies now?
Waterfall: What is the current proceeds order?
Control: Who controls enforcement?
Value: What is the latest collateral value?
Coverage: How much debt ranks ahead?
Pending changes: What is proposed but not effective?
Provenance: Can every ranking statement be traced to a current document?

If the answer to “who gets the first euro from this collateral today?” cannot be reconstructed, the priority record is incomplete.

The broader lesson is bigger than airBaltic

The same pattern appears in:

private credit;
leveraged loans;
real-estate finance;
NPL portfolios;
rescue lending;
warehouse facilities;
receivables finance;
project finance; and
secured corporate debt.

In each case, collateral can remain unchanged while claim ranking changes.

Priority is not an attribute of the collateral. It is a time-dependent relationship among claims, documents and enforcement rights.

The asset did not move.

The priority did.