What happens when a company's revenue stream dries up in relation to bondholders?

When a company's revenue stream dries up, the implications for bondholders are significant. Bondholders typically do not have a direct claim on a company's revenue. Rather, they hold debt securities that entitle them to receive interest payments and principal repayment according to the terms of the bond agreement. If a company's revenues diminish substantially, it may impact the company's ability to meet these obligations, but bondholders' claims are primarily against the assets of the company, not its revenue streams per se.

In the case of limited or no revenue, bondholders have priority over equity holders when it comes to the liquidation of the company's assets, but they do not have a direct legal claim on revenues that have not yet materialized. This distinction is crucial, as it means that, despite the bondholders being creditors, their recourse in the event of falling revenues is limited to the company’s existing assets and not to future income.

The incorrect alternatives do not reflect the nature of bondholder rights accurately. For instance, suing for compensation might not yield the desired outcome if there are no available assets to cover the debts. Automatic compensation isn't applicable either, and while bondholders do have priority in liquidation, they do not have a direct claim over revenue, which is the key point in understanding