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Simple English definitions for legal terms
vulture fund
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A quick definition of vulture fund:
A vulture fund is a type of investment company that buys companies that are bankrupt or in financial trouble. The goal is to reorganize the company and sell it for a profit. It's like buying a broken toy, fixing it, and selling it for more money.
A more thorough explanation:
A vulture fund is an investment company that buys the debt of struggling companies or countries at a low price and then tries to make a profit by collecting the full amount owed or by reselling the debt to another investor. They are called vulture funds because they swoop in to take advantage of the financial distress of others.
For example, let's say a company is struggling and owes $100 million in debt. A vulture fund may buy that debt for only $20 million. They will then try to collect the full $100 million from the struggling company or sell the debt to another investor for a profit.
Vulture funds are controversial because they often use aggressive tactics to collect the debt, such as suing the struggling company or country. Critics argue that this can harm the economy and the people who rely on the struggling company or country.