Anna Mkrtchyan September 21, 2026 Products marketed as offering bond-like certainty — a fixed coupon, a defined maturity date, a headline yield well above prevailing market rates — have proliferated across private markets in recent years. Generally referred to as corporate bonds, they are prima facie lawful instruments, however many of them are mere contractual arrangements hedged by the promised high yield income that does not have the protection of an underlying asset or liquidity (which is what a bond really means). An unpaid coupon or delayed repayment of interest should not be treated as a routine administrative issue. It may affect an investor’s ability to prevent unwanted renewal, establish the amount presently due, identify the correct party against which to proceed and preserve effective recovery options. Repeated assurances that payment is being processed do not necessarily protect contractual rights or suspend an approaching deadline and the legal disputes that may consequently arise are complex. Fichte & Co is currently advising investors in relation to similarly structured investment products, especially debt notes involving unpaid coupons, delayed repayment of principals and uncertainty over maturity and renewal. Although the documents may appear standard and justifiable in view of recovery of the amounts invested, the legal and factual position can differ materially from one case to the other. Early review is therefore essential, particularly where several notes or portfolios are involved. What ‘Bond-Like’ Actually Means? Traditionally, a bond is a debt security. ‘Bond-like’ investment products, especially the ones offered to retail investors, have a different face and most probably are: Promissory notes issued by private companies, with no supervisory trustee or financial authority, and such notes are generally unsecured; Investment agreements that disguise security, despite purporting to function as one; Instruments issued via Special Purpose Vehicles (SPV), many registered offshore, their only assets being whatever has been contributed to them. Simply put, they don’t have solid liquidity or executable assets in order to guarantee the yield or the promised return. Usual Failure Patterns in ‘Bond-Like’ Investments SPV ring fencing Whereas SPVs are lawful and widely used corporate structures for isolating assets and liabilities, these may be generally used to avoid liabilities to their parent or shareholders (even if these have a trustee or financial supervisor) and raise, in the end, a matter of structuring and enforceability in bond-like investments. It is common that SPVs are not solvable financially and tend to be shell structures that sign as counterparties various agreements with the investors. This diminishes the investor’s ability to recover principals, coupons or other amounts and raise the complexity and ambit of the legal proceedings inherent to recovery of the amounts invested. Mismatch in liquidity, maturity and the investment made Certain bond-like investments fail due to improper capital deployment, generally into illiquid assets and ventures, such as start up businesses or real estate. It is common that given this illiquidity, the issuer of the bond-like product (the investor’s debtor) does not have the necessary funds in order to pay coupons or principals on time. Improper or disguised disclosure Advertisements in bond-like investments are generous and so are the alleged financial gains, these generally appearing in excess to the actual market rates. Whereas such advertisements can imply misrepresentation and give rise to a course of action for the investor in certain jurisdictions, in UAE misrepresentations are difficult to prove in the realm of litigation, especially in onshore courts. Corporate structuring Sometimes, such investment vehicles create a maze of corporate bodies, associated with cross border components, affiliations of links. Investors dealing with such structures should understand which regulator, if any, licensed the offering, and what recourse that regulator provides, way in advance of the investment being made. Absent of a market regulator in the jurisdiction of the issuer triggers severe recoverability drawbacks for the investors. We further note that certain jurisdictions (such as UAE onshore) do not offer the remedy of class or collective actions, therefore the legal recovery mechanism needs to be pursued in contingency and on a case-by-case basis. How should the investors preserve their position? Documentation is key: it is highly advisable for the investors to preserve not only investment or subscription agreements, but also marketing brochures, emails, and payment records— especially anything showing what was represented before the investment was made, not just the contract terms. It is further important for the investor to preserve any such evidence showing how the issuer has administered the contract in its deployment phase (delays in responding to emails or reminders, delayed payments of coupons, nonpayment, speed of responding, transparency on the investments made, quality and regularity of updates and contact with the investor). The legal notices may be time-sensitive: Certain investment agreements require the investor to give written notice of non-renewal well before the maturity date. If the notice is late, incorrectly addressed or not served in the prescribed manner, the issuer may contend that the investment renewed for a further term. A properly prepared legal notice should therefore do more than request payment. It should address the relevant maturity and renewal provisions, record the investor’s position, identify the sums presently due and preserve all available rights. Reliable evidence of service can be as important as the wording of the notice itself. The issuer may not be the only relevant entity: Additional complexity arises where an investment was promoted or administered in the UAE, while the note was issued by a special purpose vehicle in another jurisdiction. The entity named in the agreement may differ from the entity that received the investment funds, paid previous coupons, communicated with the investor or presented a repayment proposal. Those facts may be legally significant, but an affiliate is not automatically liable merely because it shares a brand, management or operational connection with the issuer. The contracts, bank transfers, payment history and communications must be reviewed together to determine the proper parties and the most effective route to recovery. This is often where a focused legal assessment adds the greatest value. Several investors may act in a coordinated manner: Investors holding similar notes may benefit from coordinating common legal work, particularly where the same contractual terms, payment explanations or corporate structure are involved. Coordination may reduce duplication, support a consistent presentation of the issues and make certain recovery steps more proportionate. However, a coordinated approach does not mean that all claims are identical. Each investor may have different maturity dates, notice requirements, outstanding coupons, payment sources and counterparties. Each claim should remain separately documented, and no settlement should bind an investor without that investor’s express approval. The investment recovery outlook Recovery requires more than sending a demand: The objective is not simply to produce a forceful letter, but to place the investor in the strongest available legal and commercial position. Depending on the documents and response received, this may involve structured settlement discussions, requests for credible security, engagement with the competent authorities or proceedings before the agreed court. The right combination must be selected for the individual claim without disclosing or prejudicing the investor’s wider strategy. Potential courses of action: Depending on the dispute resolution mechanism agreed in the subscription agreements, the common courses of action imply litigation in traditional courts or arbitration. These can reach as far as initiating bankruptcy or liquidation of the issuer, in order to preserve the existing executable assets from depletion. Severe cases of misrepresentation can be pursued on criminal grounds as well, as fraud or related felonies. Further, several other avenues may be pursued by implying market regulators – for example, complaints for unlicensed securities offering – or the brokers / intermediaries that supported with the marketing of the bond-like product (on grounds of breach of trust, breach of fiduciary duty etc.). How Fichte and Co can assist Our disputes team can review the investment documents and payment trail, calculate the matured principal and unpaid coupons, prepare and serve the required legal notice, coordinate investors where appropriate and advise on settlement and reasonable recovery. Where payment is not forthcoming, we can assess the available regulatory and court options together with the practical prospects of enforcement. If you are facing unpaid coupons, delayed repayment of principal or uncertainty regarding the maturity or renewal of an investment, obtaining advice before the next contractual deadline may materially improve your position. This article provides general information only and does not constitute legal advice. The appropriate course depends on the terms of the relevant investment documents, the parties involved and the applicable law and jurisdiction.
