When a bond or other financial derivative defaults, the recovery amount is the amount that the underlying company can afford to pay. This is usually a result of a liquidation of the company's assets and generally results in a lower amount than the par value.
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recovery — re·cov·ery /ri kə və rē/ n pl er·ies 1: the act, process, or fact of recovering 2 a: the obtaining, getting back, or vindication of a right or property by judgment or decree; esp: the obtaining of damages b: an amount awarded by or collected as a … Law dictionary
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