Vulture fund

Not to be confused with Venture fund.
Mural of a vulture across from Ulster Bank HQ in Dublin, Ireland, intended as critical of vulture funds[1]
Anti-vulture fund sign in Dublin

A vulture fund is a hedge fund, private-equity fund or distressed debt fund, that invests in debt considered to be very weak or in default, known as distressed securities.[2] Investors in the fund profit by buying debt at a discounted price on a secondary market and then using numerous methods to subsequently sell the debt for a larger amount than the purchasing price. Debtors include companies, countries, and individuals.

Vulture funds have had success in bringing attachment and recovery actions against sovereign debtor governments, usually settling with them before realizing the attachments in forced sales. Settlements typically are made at a discount in hard or local currency or in the form of new debt issuance. In some instances, such as those involving Peru and Argentina, such a seizure blocked payments to other creditors of the sovereign obligor.[3][4][5]

  1. ^ "Painting of vulture appears opposite Ulster Bank HQ". independent.
  2. ^ Blackman, Jonathan I.; Mukhi, Rahul (2010). "The Evolution of Modern Sovereign Debt Litigation: Vultures, Alter Egos, and Other Legal Fauna". Law and Contemporary Problems. 73: 47–61. Retrieved 19 July 2014.
  3. ^ Ebrahimi, Helia; Blackden, Richard (24 April 2011). "Paul Singer's Elliott Management takes the fight to National Express". The Daily Telegraph. Retrieved 21 July 2014.
  4. ^ "A victory by default?". The Economist. 3 March 2005. Retrieved 4 March 2013.
  5. ^ Bronstein, Hugh (26 June 2016). "Argentina deposits debt payment, but U.S. court blocks payout". Reuters. Archived from the original on 19 December 2023. Retrieved 19 December 2023.