There are some recent instances of companies being forced into a liquidity event by hedge funds exploiting bonds in unforeseen ways. So, way more complicated th

There are some recent instances of companies being forced into a liquidity event by hedge funds exploiting bonds in unforeseen ways. So, way more complicated than shorting stocks, but kind of related to the parent question: Matt Levine has written a couple of excellent ruminations on the mechanics, social value or lack thereof, and ethics of this. > In Windstream, a hedge fund (Aurelius Capital Management LP) discovered that a company (Windstream Holdings Inc.) had already violated the terms of its bonds, so it bought those bonds and sued for a declaration that they were in default. Nobody agreed on the default, or manufactured it, or cut any backroom deals. Last week Aurelius won in court, and yesterday Windstream filed for bankruptcy. https://www.bloomberg.com/opinion/articles/2019-02-27/windstream-bankruptcy-will-destroy-value-eliminate-profits https://www.bloomberg.com/opinion/articles/2019-02-27/windst...