distressed debt funds

Distressed debt funds are investment vehicles that focus on purchasing the bonds or loans of companies experiencing financial difficulties, often nearing bankruptcy. Investors in these funds aim to buy these troubled assets at a significant discount, betting that the company's situation will improve, or that they can profit from restructuring efforts. When successful, investments can yield high returns, but they also carry substantial risk, as the company may fail and the securities could become worthless. Essentially, these funds seek to capitalize on opportunities in situations where others might be too afraid to invest.