During liquidation, convertible preferred stock is?

Convertible preferred stock is indeed senior to common equity during liquidation. This means that in the event that a company is liquidated, the holders of convertible preferred stock will have a higher claim on the company’s assets than common equity holders.

Preferred stock, in general, is designed to provide investors with a fixed dividend and has priority over common stock in terms of asset distribution if the company goes bankrupt or is liquidated. Therefore, holders of convertible preferred stock are entitled to get their investment back or a payout before any distributions are made to common equity shareholders.

This seniority reflects the structure of equity claims in a company's capital structure: debts are paid first, followed by preferred stocks, and finally, any remaining assets are distributed to common stockholders. Hence, if the liquidation occurs, convertible preferred shareholders will receive compensation prior to common equity holders being entitled to any remaining assets.