You are considering buying the bonds of ABC Corp. They have a $1000 Par Value an 8% Coupon and have 3 years remaining until maturity. Coupon payments are made semi-annually. The bonds are rated BB and other BB bonds of similar maturities are currently priced to yield 4%. ABC Corp. has also issued preferred stock with a par value of $25.00. Should ABC Corp. declare bankruptcy, which issue is more likely to have a par value recovery in a reorganization or liquidation?

1. The $1000 par value bonds
2. The $25.00 par value preferred
3. Impossible to say a bankruptcy judge determines which will be paid first.