Loan-to-own

Acquiring or originating debt with the aim of obtaining ownership through restructuring or enforcement. A purchase discount is not essential, and the intended ownership outcome may not occur.

Loan-to-own in practice

Hypothetical: an investor buys a claim expected to receive equity in a restructuring. The business value, claim rights, senior claims and legal process determine whether it receives ownership, cash or another recovery. A senior claim might be repaid while a junior claim receives equity; no specific historical transaction is asserted.

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