Next, the more junior creditors and investors, starting with shareholders, could buy the reorganization rights at auction.

The junior creditors receive 40 rights, of which they deliver 20 to shareholders and keep 20 for themselves.

Those four directors forced the company to come up with a plan that would be more generous to junior creditors.

That means there is little left over to be distributed to junior creditors, because senior creditors, by law, must get their full share first.

What Mr. Putnam did not say is that such customer service usually comes at the expense of junior creditors.

And it promises junior creditors a generous return only if the market places a high value on Macy stock in two years.

In general, junior creditors initially reacted to the company's proposal more positively than senior creditors.

The junior creditors argue that this new expense will depress the value of their stock.

If junior creditors account for more than a third of the creditors, they can force concessions from their senior partners.

They have first call on the assets of a company and get their share before any leftovers are given to junior creditors.