• blindsight@beehaw.org
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    1 year ago

    It’s all to do with the terms of the contract and collateral.

    Bonds are guaranteed by the collateral of the ownership of the company. If the company defaults on their loan, then ownership transfers to the bond holders, so the bond holders now own all the equity in the company (and previous equity holders get nothing.)

    There are no collections agents for companies because once they default, all of that is essentially triggered automatically contractually. There’s a bit of wiggle room with negotiating changing terms on the loans and such before a default happens, but that’s the broad strokes.