When a company or government defaults on its debt, bondholders can use various legal action to enforce their rights, including instituting insolvency proceedings and seeking legal compensation. However, the ability of individual investors to exercise these rights depends on the terms outlined in their respective bond documentation, and recent legal actions have highlighted several issues.

Until recently, most bondholders acted with the help of a trustee to initiate and coordinate the process of recouping their losses. This is because Latvia does not have specific legislation governing investor rights or enforcement procedures in bond defaults. Instead, such provisions are negotiated in bond documentation or by mutual agreement amongst investors. Go here https://investmentfraudlawyers.com/gwg-l-bonds-value-smashed-investors-file-claims-for-loss-recovery/

GWG L Bonds Loss Recovery: What Investors Need to Know

While corporate law has traditionally focused on protecting shareholder rights, the growing number of securities class actions alleging fraud by a corporation also impact bondholders. These classes highlight that companies often commit fraud with the intention of distributing wealth from shareholders to bondholders by hiding risks or otherwise misreporting financial performance.

Although it is hard to quantify bondholder involvement in these cases, one study found that they are much more common than may be appreciated. To do so, the study searched for bondholder recoveries from 1660 securities lawsuits and found that it is possible to identify them by analyzing notices of settlement. Furthermore, this approach avoids the over-estimation of bondholder participation in these types of cases based on looking only for instances where the class name specifically mentions bondholders.