Define: Distressed Security

UK Accounting Glossary

Definition: Distressed Security



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Full Definition of Distressed Security


A distressed security is a security belonging to a company that is under financial distress, such as bankruptcy, restructuring, liquidation, etc. in order to be able to pay debts (avoid insolvency). One strategy for dealing with a distressed security is to purchase the distressed security at a discount price and hold onto it until it has appreciated again in value. This investment strategy is considered risky because there is a chance that the company of the distressed security will not recover at all. Still, the potential profit from a distressed security makes it appealing to more aggressive investors. These profits may result from the market’s lack of understanding of the true value of the distressed security. A distressed security may also be known as a distressed asset.


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Distressed Security. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. February 25, 2020 https://payrollheaven.com/define/distressed-security/.
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Distressed Security. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/distressed-security/ (accessed: February 25, 2020).
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Distressed Security. PayrollHeaven.com. Retrieved February 25, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/distressed-security/

Definition Sources


Definitions for Distressed Security are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.