easy · Private Credit & Debt loan-structures-instruments

In a liquidation waterfall, where does 'capitalized PIK interest' rank in terms of priority?

1. It has the exact same priority as the principal of the loan to which it was added.
2. It ranks junior to the original principal but senior to equity.
3. It is considered an administrative expense and is paid out before all other creditors.
4. It is treated as a form of equity and is the first to be wiped out in a loss.

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