Glossary · L
Liquidation preference
The amount per share a preferred holder is entitled to receive, ahead of common shareholders, if the issuer is wound up. For most digital credit it starts at $100 and can float upwards with the market price.
Revised 22 October 2026 · Suggest a correction
The liquidation preference is what a preferred share is entitled to receive in a liquidation, dissolution or winding up, before anything goes to common shareholders. It comes after all creditors, plus accumulated and unpaid dividends where the series is cumulative.
The floating rule in Strategy's series
For STRF, STRC, STRD and STRE, the liquidation preference starts at $100 (€100 for STRE) and is reset every business day to the greatest of:
- the stated amount
- the prior day's last reported sale price, if Strategy sold shares of that series in the previous 10 trading days
- the average last reported sale price over the previous 10 trading days
(STRC 8-K, 29 July 2025). The effect is that if Strategy issues new shares above $100, existing holders' liquidation claim rises to match. STRK originally had a fixed $100 preference and moved to the same floating rule in an amendment filed 7 July 2025 (8-K).
In its 10-Q for the period ended 30 June 2026, Strategy reported a liquidation preference of $100 (€100 for STRE) per share for every series. This was because prices were at or below the stated amount at that date (10-Q).
Strive's series
SATA uses a similar greatest-of rule but is floored at $100 and capped at $110. The cap matches its optional redemption price (424B5, 7 November 2025). SATS starts at $100 under the standard greatest-of rule.
Where it is used beyond liquidation
The liquidation preference also sets the price of clean-up and tax redemptions. Fundamental change repurchases, by contrast, are at the stated amount.
What to check in the filing
- Starting amount and any floor or cap
- Reset frequency and price inputs
- Which payments use it (redemptions vs repurchases)