What Is a Liquidation Preference?

A liquidation preference is the amount you receive as a preferred shareholder before common shareholders see a cent when the company is dissolved, sold or wound up. For bitcoin preferreds such as STRF, STRD or SATS it is usually $100 per share plus unpaid dividends. But the preference is only a place in the queue, not collateral: whether the $100 actually arrives depends on the bitcoin price on the day assets are realised and on how many claims stand ahead of you.

How a preferred share is built in general is explained in What is a preferred share?. What happens legally in an insolvency, from Chapter 11 to Germany's InsO, is covered in What happens to the coins when a treasury company goes bust?. This article is about the one number in between: the amount your preferred share promises in a wind-down, and how much of it survives at different bitcoin prices.

Liquidation preference in plain words

Picture a company that is shutting down. Everything is sold and the money sits on one pile. Now it is handed out in a fixed order: creditors first, then preferred shareholders, common shareholders last.

The liquidation preference sets how much a preferred shareholder may claim from that pile. If the prospectus says "liquidation preference of $100 per share", you get up to $100 for each share before common shareholders are paid.

Two things follow:

• You are not protected on the downside. If, after the creditors, the money covers only $40 per share, you get $40.
• You are capped on the upside. If there is ten times as much left after you, you still get $100. The surplus belongs to common shareholders.

That is why a bitcoin preferred behaves more like a bond than a stock in a wind-down: you hold a fixed amount, not a share of the coins.

Stated amount and liquidation preference: $100 and what is added

For almost every bitcoin preferred the starting point is the stated amount: $100 for STRF, STRC, STRK, STRD, SATA and SATS, €100 for STRE, £100 as the reference amount for MORE from The Smarter Web Company. Dividends are calculated on this amount, and it is the base of the liquidation preference.

Depending on the instrument, two things are added.

1. Unpaid dividends. With cumulative instruments such as STRF, STRC, STRE, STRK, SATA and SATS, missed dividends are not forgotten; they are added to the claim. If Strive suspends the SATS dividend for a year, your claim stands at $115 per share. Under the terms, SATS arrears do not compound. For STRD, which is non-cumulative, only dividends the board has declared but not yet paid count. What does "cumulative" mean for preferred shares? works through the difference.

2. Strategy's adjusting preference. Strategy sells its preferreds continuously on the market. So that a buyer paying more than $100 in those sales also gets a correspondingly higher claim, the liquidation preference of all shares rises after days with such sales to the highest of three values: $100, the last closing price, or the average of the last ten trading days. It never falls below $100. For STRF it stood at $103.57 per share on 30 September 2026, according to the quarterly report. STRK and STRD traded at about two thirds of their stated amount in November 2026, STRE below €100; for them it stays at the stated amount.

As of November 2026, per the issuers and SEC filings. Ahead of all Strategy preferreds stand convertible notes of $6.71bn; Strive has no financial debt.

Where to find these clauses in the prospectus, under "Liquidation, Dissolution or Winding Up", is shown in How to read a prospectus for preferred shares.

Rank decides when you are paid

The preference says how much. The rank says when. A preferred with a $100 preference in fifth place can end up with nothing, while one with the same preference in first place is paid in full.

At Strategy the queue runs: convertible notes, then STRF, STRC, STRE, STRK, STRD, with MSTR at the very back. At Strive: SATA, then SATS, then the common stock ASST. How these layers came about and what they cost each year is described in Strategy's capital structure.

Rank depends on the amount of the preference, not the market price. A STRD holder who bought at $67.50 and one who subscribed at $85 in 2025 have the same claim: $100 per share.

The width of your layer matters as much as its place

A layer is the range of bitcoin prices over which an instrument moves from "nothing" to "paid in full". How wide this range is depends on how large the instrument is relative to the bitcoin holdings.

STRC, with $8.18bn stated amount, is a wide layer. Everything behind it, STRE, STRK and STRD, are thin layers of $0.9bn to $1.4bn. Thin means a small price drop is enough to push them from full payment to zero.

How much bitcoin stands behind your share in a wind-down?

The usual measure is BTC coverage: how many times the bitcoin holdings could pay all claims up to and including your instrument. It is good for comparisons but does not tell you directly what remains per share in a wind-down. The calculation below does. How to read coverage yourself is explained in Effective yield, BTC coverage and BTC price at 1×.

The calculation assumes Strategy is wound up at a given bitcoin price and all 849’327 BTC (as of 1 November 2026) are sold without a discount. The queue is then served from the top. The table shows how much of the $100 preference per share arrives.

Between $21’720 and $23’371, STRD flips from nothing to everything. That is a price band of about $1’650, a little over 2% of the November 2026 price. STRC needs the whole stretch from $9’417 to $19’051.

From $25’000 every preference is paid in full and the remaining $1.4bn goes to MSTR shareholders. At $75’000 it would be about $44bn. The $100 per preferred share does not change.

The dollar reserve would move every threshold down by a good $5’600; the costs of a procedure and discounts on selling 849’327 BTC would move them up. The order of magnitude holds: Strategy's junior preferreds are at risk only at a bitcoin price around $20’000, but then quickly in full.

Worked example: 100 SATS shares at Strive

Strive is simpler. It has no financial debt, 43’124 BTC (as of 30 October 2026), and two preferreds: SATA ranked first with $1.40bn and SATS second with $0.70bn stated amount.

Here the cash helps. Strive reported about $490m in cash and 505’000 STRC shares on 30 October 2026. The cash alone equals about $11’400 per bitcoin held: counting it, SATS would be fully covered from about $37’400. Part of that cash is meant for the coming months' dividends, though, and gets spent precisely in a crisis. What else separates SATA and SATS is in Strive SATA and SATS explained.

Preference and purchase price: why a discount is not a gift

Many bitcoin preferreds trade well below their preference. STRD stood at about $67.50 in November 2026 but carries a $100 claim. That looks like a 48% gain in a wind-down.

The sum only works if the wind-down happens at a bitcoin price at which STRD is fully covered. But that is exactly when Strategy is unlikely to be wound up: at $50’000 the company would have no reason to dissolve. A real procedure is more likely after a deep crash, in the zone where the table above shows little or nothing for STRD.

The discount to the stated amount therefore has other causes: a fixed rate after rates rose, the risk of suspended dividends, the last rank. A gain up to $100 is most realistic through a rising price, an issuer redemption or a takeover. For STRD, Strategy may redeem only if fewer than 25% of the issued shares remain, and then at the liquidation preference.

Liquidation preference in German law and in start-ups

In German-speaking countries the term is best known from start-ups, but in a different form.

German Stock Corporation Act. § 11 AktG allows shares with different rights "in the distribution of profit and of the company's assets". When a German AG is wound up, the liquidator distributes the assets under § 271 AktG in proportion to the share capital, unless the articles give certain classes priority. Classic German preferred shares such as those of VW or Henkel have a dividend preference but, as a rule, no fixed liquidation amount like $100.

Start-ups. Venture capital agreements often contain a "1x liquidation preference": in a sale the investor first gets the money paid in back. It comes non-participating, where the investor chooses between the preference and a share of the proceeds, or participating, where the investor gets both.

Bitcoin preferreds are the US variant: never participating, always capped. A STRD holder cannot switch to a share of the bitcoin holdings in a wind-down. Only STRK offers a route there, by converting into 0.1 MSTR shares each, and that pays off only with MSTR above $1’000.

How to check the liquidation preference before buying

1. How high is it today? Stated amount, possible increase from market sales, unpaid dividends.
2. Who ranks ahead? Add up all debt and senior preferreds. The digital credit overview shows this per issuer.
3. How wide is your layer? Divide the claims ahead of you and including you by the bitcoin holdings. If both values are close, your instrument flips quickly.
4. May the company issue new instruments ahead of you? Strategy's prospectus says explicitly: yes. Every new senior issue pushes your layer up.
5. Is there cash? Cash reserves improve the position as long as they are not used up for dividends.