The onset of the global pandemic in 2020 led many investment firms to see a real opportunity in Distressed Debt. In particular, when the pandemic first broke out, “Dislocation” funds saw rapid fundraises that were then deployed quickly. Apollo, KKR, Strategic Value Partners and Varde were among the firms launching dislocation funds in 2020.These funds have seen stellar returns as markets bounced back very quickly. However, the return to some form of normality coupled with the massive liquidity pumped into markets by central governments has meant the Distressed or “Special Situations” opportunity has largely not become tangible. In summary, this is unchartered territory in the Distressed Debt sector. There will be ripple effects from the challenges of 2020 but it remains unclear how and when these will play out. Only once government interventions recede in impact will we know whether the much-anticipated opportunity in this category bears fruit.