Vulture Funds: A Few Working Definitions

1. Vulture Funds are companies that buy defaulted "bad" debt of highly-indebted poor nations at a cheap price. Many of these companies seek debt that is about to be written off by debts relief or cancellation. Vulture funds buy the debt from the creditors at a large discount before restructuring takes place. These funds seek repayment of these debts via litigation - suing for the full value of the debt plus interest to garner much higher paybacks and tremendous profit. [1]

2. A "vulture fund" is a financial institution that specializes in buying securities which can be in the form of company shares, industries and debts in distressed economic environments. These securities could be high-yield bonds/shares in or near default and debts where debtors are struggling to pay. The goal of the vulture fund is to make profit by buying cheap debts of struggling companies and recently, heavily indebted third world countries facing debt repayment difficulties.[2]

Citations
[1] transAfrica forum. Vulture Funds: The Facts, May 1, 2007
[2] Jubilee Zambia. Vulture Funds and Debt Relief, The Immoral Tactics of Vulture Funds: The Case of Zambia. February 2007.