Recovery of bond claims

On paper, a bond is a strong claim: a security carrying the holder’s right to repayment of nominal value and payment of returns, and the issuer’s duty to meet those obligations. In practice, the outcome depends on the same three questions as any recovery: what can you prove, what can the issuer pay from, and which procedure will get you paid first? Each has particular features for bonds.

Issue terms: the decisive document

The issue terms set out the issuer’s and bondholder’s rights and obligations. They specify when principal matures, when returns are paid, whether and when early redemption can be requested, and whether the issue is secured. We therefore begin with them and supplement them with the holder’s statutory rights — together, they determine what you can claim today and what must wait.

Early repayment of principal may arise under the issue terms or by law. In Slovakia, a specific right may arise, for example, following certain changes approved by a meeting under § 5b(4) of the Bonds Act; Czech issues are governed by their own rules. Well-structured issues contain acceleration events, such as default on returns, issuer insolvency or breach of obligations. If your issue has such a clause, you need not wait for ordinary maturity and can act immediately. For a Slovak issue, where rights under bonds are not satisfied on time, the issuer must also convene a bondholders’ meeting; holders of at least 10% of the issue’s nominal value may request one too.

Your evidential position as a holder

In court, you must prove that you own the bonds and the claim is due. For certificated bonds, this means the certificates and evidence of acquisition; for book-entry bonds, a statement from the holder’s securities account, typically CDCP in Slovakia. Also the subscription or purchase agreement and proof of payment. If you acquired the bonds from another investor, we check the transfer chain too. Evidential weaknesses should be addressed before filing, rather than when the issuer challenges them.

An honest view of the issuer

Investors most often skip this part, then pay for a judgment that produces nothing. We check the issuer and the people behind it in public registers, financial statements and enforcement or insolvency records. We want to know whether there are real assets, how many other issues it has made, whom else it owes and whether insolvency indicators are emerging.

We tell you openly: with an issuer without assets, speed and insolvency matter. Timely action helps preserve procedural rights and recovery options. In bankruptcy, however, ordinary unsecured claims of the same rank are satisfied proportionately if the proceeds are insufficient; an earlier claim or filing does not in itself give them a higher rank. That is why searches come first, rather than after wasted months. If the outlook is poor, we recommend investing no further money. That too is an outcome that saves money.

Secured and unsecured bonds

For secured bonds, a guarantor guarantees repayment or repayment is secured otherwise, most often by a pledge, typically over project property in real estate issues. Each holder often does not hold the pledge individually. It is established for holders through a common representative or security agent, who enforces it in their own name for the holders’ account. We check exactly what is pledged, its current value and how enforcement is actually triggered, because security on paper and enforceable security are different things.

Beware subordinated bonds: in bankruptcy, their claims are paid only after all other creditors. We identify subordination from the issue terms at the outset, because it changes the entire strategy.

Recovery routes

Demand to the issuer. A legally substantiated lawyer’s demand calculating principal, returns and ancillary claims. Some issuers who are ‘playing for time’ pay or at least present a realistic plan, while the demand also prepares the ground for court proceedings.

Claim for payment. Due principal and returns are monetary claims like any other. They are recovered through a claim and, with strong evidence, also through summary proceedings. A final decision is an enforceable title.

Enforcement. With a title, we file an enforcement application and monitor asset searches. For an issuer with real assets, this is the final stretch. For one without assets, it would merely add another cost, which we explain in advance.

Lodging a claim in bankruptcy or restructuring. If the issuer is insolvent, individual recovery loses its purpose and a timely, properly prepared filing is decisive, including returns and security. Filing periods are short and missing them in restructuring is generally final. We therefore monitor the issuer throughout recovery and respond immediately to insolvency.

Several holders: joint action

A troubled issue rarely affects only one investor. Joint action reduces search and representation costs by sharing them and gives the group greater influence, from a joint demand and bondholders’ meeting to coordinated bankruptcy filings. We can represent the group as a whole and structure the approach so nobody misses deadlines.

If the issue shows signs of fraud

Some issues prove troubled from the outset: investors’ money did not go where it should, and the issuer never had resources to pay. In such cases, we carefully examine the potential criminal aspects and advise whether a report to criminal authorities makes sense alongside civil recovery, as a supplement to the strategy rather than a substitute. Criminal proceedings do not themselves return the money; they can provide information and pressure where the civil route faces obstacles.

We do not promise recovery, which for bonds depends above all on the issuer’s position. We promise that within 24 hours you will know what you can claim under the bond, the issuer’s position and whether recovery makes financial sense. We also promise to confirm each further step and its price before it arises.