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In the previous video, we discussed a scenario where a company was unable to pay its debt holders, leading to bankruptcy. The bankruptcy court decided to liquidate the company's assets as they were deemed nonviable. Debt holders, who have priority over equity holders, are paid first with any remaining funds. If there isn't enough money to pay all debt holders, equity holders receive nothing. This process is known as Chapter 7 liquidation in the corporate world, which is typically associated with a company going bankrupt and disappearing.
